updated 4/4/2005 9:02:35 PM ET 2005-04-05T01:02:35

The new chief executive of American International Group Inc. says he is cooperating fully with regulators, who are looking into widespread accounting irregularities, and the New York attorney general said he thinks a "civil resolution" of the probe is possible.

The statement from Attorney General Eliot Spitzer that a resolution could be reached without criminal charges sent the huge insurance company's shares up $2.35, or 4.6 percent, to close at $53.30 in Monday trading on the New York Stock Exchange, putting more distance from their recent 52-week low of $50.16.

In a letter to shareholders released late Sunday night, CEO Martin J. Sullivan said management was working "to ensure that everyone throughout the organization complies with AIG's policy of full cooperation with all investigative efforts, both internal and external."

Sullivan, who was named to the top post on March 14 after the board forced the resignation of longtime CEO Maurice "Hank" Greenberg, also said AIG "has worked diligently to protect and preserve relevant documents" needed in the probe by the Securities and Exchange Commission and Spitzer's office.

Sullivan made the statement about documents after acknowledging an earlier-reported incident in which documents were removed from an AIG building in Bermuda or destroyed. He said one Bermuda-based employee was terminated and several others resigned "for failure to cooperate with AIG's review."

He also emphasized that despite the investigations, AIG is not in any financial danger.

"It is unfortunate that current circumstances have obscured the reality that AIG's unique global franchise is sound, our financial position is solid and cash flow remains strong," Sullivan said in the letter.

On Monday, Spitzer said the board and current management of AIG "are now cooperating" with his continuing investigation.

"Based upon these efforts, and based upon our knowledge to date, we believe that a civil resolution with the corporation will ultimately be achievable," Spitzer said in the statement.

AIG's shares have fallen nearly 30 percent since mid-February when subpoenas by the regulators were disclosed.

On Monday, brokerages upgraded AIG shares on grounds they had dropped too low.

Smith Barney raised its recommendation to "buy" from "neutral," citing the company's strong business model and what it termed the "extremely remote possibility" of criminal prosecution of the firm.

Morgan Stanley, meanwhile, raised AIG to "overweight" from "equal weight," primarily on valuation.

Meanwhile, The Wall Street Journal reported in its Monday editions that a private company that controls about 12 percent of AIG shares ousted at least seven AIG executives from its board, including Sullivan.

The Journal, citing unnamed people familiar with the matter, said the move by the owners of Starr International Co. — who include Greenberg — mean that Sullivan no longer has any say over a big portion of AIG's executive compensation program.

Starr International has long been used for a deferred-pay and investment plan for AIG management.

Regulators, as part of a broad investigation into AIG's activities, are examining whether Starr International and its cross-ownership by AIG executives pose potential conflicts of interest.

The most-immediate potential conflict is that AIG executives continue to rely on Greenberg, who is chairman of Starr International, for a big portion of their pay, even after Greenberg has been pushed from the firm.

Separating the two companies could alleviate concerns that Greenberg might be able to use his control at Starr International to wield power over AIG, The New York Times reported Monday, also citing an unnamed source.

The abrupt move, conveyed in letters sent last week to each AIG executive and bearing a single sentence, also removed AIG Executive Vice Chairman Donald Kanak.

Regulators weren't notified of the moves by the owners of Starr International, and they were immediately suspicious and planned to examine the action, the Journal said, citing a person close to Spitzer.

Starr International's compensation program set aside AIG shares valued at $129.6 million for AIG executives, the Journal said.

As of 2004 Greenberg owned 8.33 percent of Starr International's common stock, the Journal said. As many as 37 AIG executives and directors own nearly 34 percent more of Starr's shares. The ownership of the remainder isn't disclosed in public documents.

Starr International, a Panamanian company with its own office in Bermuda, is one of three private organizations, all named for AIG's late founder, C.V. Starr, run largely by AIG past and current insiders.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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