NEW YORK - US insurance giant AIG and four of its former senior executives agreed to pay US$115 million (S$165 million) to settle claims stemming from charges of fraud, the investors' law firm said on Thursday.

The agreement followed a six-year shareholder action against American International Group and several former senior executives and directors, including AIG's former chairman and chief executive Maurice 'Hank' Greenberg.

'It came on the eve of a trial scheduled next week,' said Grant & Eisenhofer, the law firm representing the plaintiffs.

Greenberg and the three other former executives were accused of conducting 'an extended series of transactions expressly engineered to siphon money away from the company and into private affiliates they controlled,' the law firm said.

The suit, filed in 2002 by Teachers' Retirement System of Louisiana, alleged that Greenberg and other AIG executives and directors breached their fiduciary duties by directing insurance business worth hundreds of millions of dollars in commissions to a private offshore affiliate controlled by Greenberg and other AIG managers. -- AFP