AIG to Pay $126 Million to Settle Allegations

American International Group Inc. agreed to pay $126 million and appoint an independent monitor to settle allegations that it helped two companies fraudulently inflate earnings, U.S. authorities said Tuesday.

The settlements call for New York-based AIG, the world’s largest insurer, to pay $80 million to settle a Justice Department criminal probe. The agreement, confirmed Tuesday, was first reported last week.

AIG will also cooperate with a Justice Department investigation into transactions that include the marketing and sale of a nontraditional insurance product by an AIG unit to Plainfield, Ind.-based cellphone distributor Brightpoint Inc.

AIG will also pay $46 million into a victim restitution fund related to the resolution of criminal allegations against a unit of PNC Financial Services Group Inc., Pennsylvania’s largest bank, according to the Securities and Exchange Commission.

The SEC said AIG helped Pittsburgh-based PNC remove $762 million in loans and venture capital assets from its balance sheet.

“By removing these assets from its balance sheet, the company supposedly would be able to avoid charges to its reported earnings from declines in the value of these assets,” the SEC said.

AIG neither admitted nor denied wrongdoing. Its shares fell 43 cents to $63.35 on the New York Stock Exchange.