wilmington (Bloomberg) — American International Group Inc. investors won final approval of a $115 million settlement of claims that the insurer overpaid a firm controlled by Maurice (Hank) Greenberg and other executives by $1 billion.

Delaware Chancery Court Judge Leo Strine concluded the accord was a reasonable resolution of a lawsuit over the payments to C.V. Starr & Co. Greenberg, AIG's former chief executive officer, and three other ex-officials must pay a total of $29.5 million under the settlement. The $115 million will go back into AIG's coffers.

"AIG is going to benefit substantially from this," Strine said at a hearing yesterday in Wilmington. The US government rescued New York-based AIG last month with a bailout now valued at about $150 billion after investment losses threatened the company's survival.

Starr, a private insurer and broker controlled by Greenberg, gave the men bonuses based on fees from AIG, according to a lawsuit by a Louisiana pension fund. Greenberg, 83, stepped down as AIG's CEO in March 2005 amid accounting probes that led to a $3.4 billion restatement of profits.

The Teachers' Retirement System of Louisiana claimed that almost half of the $2.2 billion that AIG paid to Starr from 2000 to 2005 represented sham commissions and fees for work that, in some cases, was done by AIG employees. Investors also questioned why some AIG executives were allowed to serve simultaneously as officers of Starr while profiting from business between the two companies.

Greenberg was travelling and unavailable for comment on the settlement's approval yesterday, Starr officials said. Dan Kramer, a lawyer for AIG, said the insurer was pleased to recover the $115 million.

The settlement will help AIG "continue to create value for shareholders and make sure US taxpayers are repaid as soon as possible", Kramer said in a telephone interview.

Greenberg, who ran AIG for almost four decades, is Starr's chairman and CEO. Ex-AIG chief financial officer Howard Smith, vice-chairman Edward Matthews and Director Thomas Tizzio also were sued, along with Starr. All later agreed to settle claims over the payments.

Lawyers for the Louisiana pension fund originally sought to recoup about $1 billion for the company over commissions and other payments funnelled between AIG and Starr and their officials.