American International Group Inc., the insurer under investigation for potential accounting irregularities, used private, offshore companies for six times more reinsurance than any of its nine biggest US competitors, state regulatory filings from 2003 show.

Transactions with private reinsurers in countries such as Barbados may be more prone to abuse because of little regulatory oversight, said Fitch Ratings analyst Donald Thorpe. The US Securities and Exchange Commission and New York Attorney General Eliot Spitzer are investigating whether AIG used reinsurance to manipulate earnings, and the SEC demanded information on offshore contracts in a March 25 subpoena, a person familiar with the investigation said.

?It?s just not transparent,? said Thorpe, who studies non-traditional reinsurance policies for Fitch in Chicago. ?You don?t know what?s going on there.?

Private companies in Bermuda and Barbados accounted for at least 11 percent of the $21.1 billion in reinsurance outstanding at New York-based AIG?s US subsidiaries as of 2003, according to an analysis of regulatory data compiled by ScheduleF.com. The next highest amount was 1.8 percent at Chubb Corp., the seventh-biggest US commercial insurer in 2003, the analysis showed. AIG spokesman Chris Winans declined to comment.

The SEC and Spitzer are investigating whether companies are misusing reinsurance accounting to mask losses or make their reserves for claims appear bigger.

AIG also may have policies with offshore entities that it controls, effectively doing business with itself while taking advantage of the accounting that comes with transferring risk to other companies, said the person, who declined to be identified. Insurers buy reinsurance to limit their risks from claims.

The probes forced the March 14 resignation of chief executive officer Maurice (Hank) Greenberg and delayed the filing of AIG?s annual report pending a review of transactions under investigation. The company may need to correct $1.5 billion to $3 billion worth of mistakes since 1999, the Wall Street Journal said yesterday.

The SEC sent AIG a subpoena March 25 seeking details on all offshore transactions that might be used to manipulate the company?s finances, said the person. It was aimed at ensuring that AIG and its lawyers don?t leave out any transactions or evidence from their internal investigation, the person said.

Transactions with publicly traded companies are also under scrutiny, and the SEC has sent subpoenas to 12 AIG executives about a four-year-old deal that Greenberg, 79, initiated with Warren Buffett?s Berkshire Hathaway Inc., the person said. Those subpoenas were previously reported by the Journal.

One of the subpoenas was sent to Michael Murphy, a senior executive in Bermuda. Murphy was fired for failing to cooperate with the probe, Winans said. He joins two other executives, including former chief financial officer Howard Smith, in losing his job for that reason. Murphy?s lawyer, Sean O?Shea, declined to comment.

Shares of AIG rose $1.41, or 2.5 percent, to $57.02 in New York Stock Exchange composite trading yesterday. About $41 billion in market value has been wiped out since AIG disclosed subpoenas on accounting February 14.

Winans, Spitzer spokesman Darren Dopp and SEC spokesman John Nester declined to comment on AIG?s transactions with offshore, private companies. Winans declined to comment on the executive subpoenas and said the transactions under review aren?t likely to have a ?significant? effect on the company?s book value.

The analysis examined the 20 biggest reinsurers for each of the ten largest US commercial insurers. Seven of the ten, including Zurich Financial Services AG, Liberty Mutual Group, Hartford Financial Services Group Inc., and St. Paul Cos., and Travelers Property Casualty Corp., used no private, offshore reinsurance, according to ScheduleF.com, a service created by Dowling & Partners Securities LLC and the Reinsurance Association of America. Chicago-based CNA Financial Corp. had one percent. Spokespeople for the companies declined to comment.

Investigators are probing AIG?s relationships with offshore reinsurers including Richmond Insurance Co. and Union Excess Reinsurance Co., both registered in Barbados, said the person. The companies only do business with AIG, according to ScheduleF.com.

Richmond Insurance accounted for $666 million of AIG?s expected reinsurance payments in 2003 and Union Excess Reinsurance Co. accounted for $497.7 million, according to data from ScheduleF.com. Western General Insurance Ltd., a third offshore company, was AIG?s fourth-biggest reinsurer in 2003 with $1.13 billion, or 5.4 percent, of AIG?s reinsurance assets.

Together they represented more business than any other AIG reinsurer except Germany?s Hannover Re, the world?s fifth-biggest reinsurance company.

Richmond Insurance operates from Bermuda and lists AIG as its ?management company?, according to a Bermuda business directory. AIG?s CEO in Bermuda, Joseph Johnson, is Richmond?s president, the directory says, and the companies have the same address and telephone numbers. Johnson?s assistant said he was unavailable for comment.

AIG considers Richmond and Union Excess as unaffiliated companies in its statutory filings. Munich Re has had a 49 percent stake in Richmond for more than 10 years, Munich Re spokesman Rainer Kueppers said.

Western General is controlled by Chicago?s Pritzker family, which owns the Hyatt hotel chain, according to credit rating company A.M. Best Co. Western General President John Marion, when reached by telephone in Bermuda, said ?we are a private company and don?t talk to the press.? Mark Hoplamazian, who represented the Pritzkers on Western General?s board at least through 2003, didn?t return a phone call.

Standard & Poor?s analyst Grace Osborne said the credit-rating company will have to determine if AIG used reinsurance transactions to mask ups and downs in the company?s results. After Greenberg stepped down as CEO on March 14, Fitch Ratings lowered AIG?s credit rating to AA+, and S&P has said it may do the same.

?One of the elements of S&P?s ratings on AIG is the consistency and sustainability of earnings over time,? Osborne said. ?If the inherent volatility is greater than what was demonstrated, that?s an issue we?d be concerned about.?

AIG probably used private entities in part because larger, more established companies weren?t willing to sell AIG enough coverage, said Al Copersino, an analyst at Columbia Management Advisors in New York. AIG collected 73 percent more commercial insurance premiums than its biggest competitor in 2003, according to A.M. Best.

?AIG has to look pretty far afield to find all the reinsurance it needs,? said Copersino. Columbia?s parent, Bank of America Corp., owns 18.69 million AIG shares.

AIG plans to file its annual report with the SEC by March 31, and S&P expects more details about reinsurance transactions.

?AIG has always been an innovator in their reinsurance strategy,? said S&P analyst Mark Puccia. ?The question now is whether they crossed the line.?