NEW YORK (Bloomberg) — A federal judge rejected claims by American International Group Inc. alleging a private company run by its former chief executive officer, Maurice (Hank) Greenberg, breached its duty of trust to the insurer.

US District Judge Jed Rakoff in New York ruled that Greenberg's firm, Starr International Co., or SICO, didn't violate a duty to hold AIG shares after 2005. Rakoff upheld a jury's July 7 verdict finding no such breach. In his ruling, Rakoff didn't address the jury's rejection of AIG's claims that SICO looted $4.3 billion in stock from the insurer.

During a three-week trial, AIG claimed an oral trust was created in 1970 solely for the benefit of AIG and its deferred-compensation programme, and SICO breached that trust in 2005 to retaliate for Greenberg's firing amid an accounting scandal. Jurors said AIG failed to prove its looting claim against Greenberg's firm.

"The law will not recognsze such an oral trust unless the evidence of its creation is unequivocal," Rakoff wrote in a 59-page ruling. "This is a burden that AIG has not come close to shouldering."

• Later yesterday, AIG jointly announced with Greenberg and the company's former chief financial officer Howard Smith that they had agreed on terms for binding arbitration of various legal disputes between them.

The statement said: "The parties have concluded that it is preferable to resolve as many of their disputes as possible in a private setting, and in a more expeditious and cost-effective manner. The arbitration will commence no later than October 15, 2009, and will conclude by March 31, 2010."