The downfall of his former firm is generating massive payouts through two investment vehicles.
WSJ: The collapse of American International Group Inc. shares might not be something former longtime Chief Executive Maurice “Hank” Greenberg ever wished for, but it is generating big payoffs on two bets his investment vehicle made three years ago.
On Monday, C.V. Starr & Co. turned over 4.42 million shares valued at $8.4 million to fulfil a variable prepaid forward contract with Credit Suisse Group that generated $240 million for Mr. Greenberg when he entered it. The delivered shares represent the contractual maximum based on a formula tied to the stock price…
When Starr entered the deal, AIG shares were trading at about $67, meaning the stock turned over Monday was worth $296.3 million in 2005. Mr. Bettis said banks receive the shares at a discount as incentive for taking the risk and typically balance that risk with their own hedging strategies…
Starr has a similar deal with Citigroup Inc. for $160 million that comes due later this month. The maximum number of shares required to be turned over under that contract is 2.92 million.
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