WILMINGTON, Delaware (Bloomberg) - General Re Corp., an insurer owned by Warren Buffett's Berkshire Hathaway Inc., won dismissal of a lawsuit accusing it of helping former American International Group Inc. (AIG) CEO Maurice "Hank" Greenberg defraud investors.

Delaware Chancery Court Judge Leo Strine threw out AIG shareholders' claims that officials at General Re, insurer Ace Ltd. and insurance broker Marsh & McLennan Cos. conspired with Mr. Greenberg to manipulate AIG's finances. The judge ruled in February that Mr. Greenberg and other former AIG executives could be sued over the allegations of financial misconduct.

Mr. Strine concluded yesterday that because officials at New York-based AIG allegedly engaged in fraudulent transactions with rivals, AIG investors could not seek to recover from the other insurers.

Shareholders incorrectly sought to have each company's role in the conspiracies scrutinized, so that each "gets no more or less than its just share of the unjust desserts of its illegal conduct", Mr. Strine wrote in a 38-page decision. Established legal doctrines bar investors from recovering from third parties for their company's own wrongdoing, the judge said.

Al Modugno, a spokesman for Marsh & McLennan, declined to comment on Mr. Strine's ruling today. Marc Hamburg, a spokesman for Omaha, Nebraska-based Berkshire, did not immediately return calls for comment.

Ace based in Bermuda, does not comment on litigation, spokesman Stephen Wasdick said in a statement. Stuart Grant, a Wilmington, Delaware-based lawyer representing AIG shareholders, did not immediately return a call for comment on the decision.

AIG, which has been bailed out four times by taxpayers during the past 10 months, is dismantling itself to repay the government and distance subsidiaries from the company's brand.

AIG almost collapsed in September after rating downgrades forced the company to post collateral on swaps. The insurer got an $85 billion US credit line. The total amount of government bailout money has risen to $182.5 billion.

In the Delaware case, AIG shareholders allege Mr. Greenberg and three lieutenants engaged in financial manipulations to inflate the company's share price. Investors sued Edward Matthews, former vice-chairman; Thomas Tizzio, a former director; and Howard Smith, the former chief financial officer, along with Mr. Greenberg. All have left the company.

Mr. Strine noted in his February opinion that AIG has had to pay more than $1.6 billion in fines over financial restatements that reduced stockholder equity by $3.5 billion.

Among shareholders' claims are that Mr. Greenberg and other former executives conspired with Marsh & McLennan and ACE officials to rig bids for insurance contracts.

The big-rigging allegations, first raised in 2004 by then- New York Attorney General Eliot Spitzer, involved "an unlawful scheme to fix prices and to rig bids in the municipal derivatives market", according to papers filed in 2005.

"I don't see any reason to let these guys off the hook," Mr. Grant told Mr. Strine in his argument.

Lawyers for General Re, Ace and Marsh & McLennan countered that since no company had clean hands in the case, the law only allowed AIG investors to recover for AIG officials' wrongdoing.

"Ace and Marsh didn't cause AIG to do anything," James Brandon, a lawyer for those companies, told Mr. Strine at the hearing. Neither firm held "a gun to AIG's head."

Mr. Strine said long-standing legal doctrines make it clear investors cannot hold third parties responsible when executives of their own company are involved in wrong-doing.

Allowing shareholders to do so would force judges to make a "determination of who won or lost from a criminal conspiracy, a determination fraught with uncertainty", the judge said.

Mr. Greenberg, 84, currently is facing claims in federal court in New York that he looted an AIG retirement plan after he was ousted as CEO in 2005 amid an accounting scandal. Jurors will decide whether Greenberg's Starr International Co. wrongfully converted more than $4 billion in AIG shares to its own use.

Mr. Greenberg, Mr. Matthews, Mr. Smith and Mr. Tizzio previously agreed to pay $115 million to resolve claims they caused AIG to overpay a firm they controlled to reap bonuses and fees.