The former chief executive of American International Group and others have agreed to pay $115 million to settle claims in a lawsuit filed on behalf of three Ohio state pension funds and other shareholders, Ohio Attorney General Richard Cordray said last night.

It would be the third such settlement from the lawsuit, for a total of $284.5 million. Cordray said he is preparing for trial if necessary against AIG on allegations of bid-rigging, accounting fraud and other practices that affected financial results.

"I think it's significant news nationally," Cordray told The Dispatch last night. "It's not only a lot of money here, but it provides significant momentum in the case against AIG."

Cordray said there in an agreement in principle to settle claims against former AIG Chief Executive Maurice R. "Hank" Greenberg, three other former AIG executives -- Howard I. Smith, Christian M. Milton and Michael J. Castelli -- and their related corporate entities, C.V. Starr & Co. Inc. and Starr International Co. Inc.

The agreement must be approved by a federal court in New York and the boards of the Ohio Public Employees Retirement System, the State Teachers Retirement System and the Ohio Police & Fire Pension Fund, Cordray said.

The Ohio attorney general is the lead plaintiff in the class-action lawsuit, which was filed in 2004 on behalf of AIG shareholders.

The lawsuit seeks damages for investors who bought AIG securities between Oct. 28, 1999, and April 1, 2005. Cordray estimates that losses incurred by the state pension funds reach into the billions of dollars.

The other settlements in the case previously announced by the Ohio attorney general's office are $97.5 million with PricewaterhouseCoopers in 2008 and $72 million with General Reinsurance Corp. in February.

In the latter case, General Reinsurance is alleged to have participated in a fraudulent $500 million reinsurance transaction with AIG that allowed AIG to improperly inflate its loss reserves, Cordray said early this year.

Loss reserves are a key indicator of a company's financial health to investors and insurance-industry analysts.

mniquette@dispatch.com

This is the third settlement in Ohio Attorney General Richard Cordray's suit; the three total $284.5 million.