Investors confident of pursuing AIG Life in court

Investors in the doomed AIG Life enhanced fund say that they have a ‘strong legal case’ to sue the company after seeking advice from lawyers.

Previously, it was thought legal action on behalf of policyholder action group AIG Victims would focus on the private banks and adviser firms that sold the product.

‘Our initial advice has turned up even better than we hoped and we will have a very strong legal case when we sue AIG. While we can’t reveal exactly what the advice is at this time it looks like we’ll all be covered,’ said Simon Gilbraith, chairman of AIG Victims.

While the case against AIG is yet to be confirmed, possible action against the company could centre on the way that the product was described to advisers in client literature and the investments held by the fund, according to analysts MaxCap Partners.

Many investors are unhappy that the fund was marketed as secure and liquid but was unable to withstand the latest market downturn.

Another avenue lawyers have been considering is whether some of the underlying assets were not permitted investments under the criteria of the fund.

The group, which has over 500 members, wrote to AIG chief executive Edward Liddy and the major private banks that sold the enhanced fund to put pressure on them to reach an out of court settlement.

It has already met with AIG Life UK general manager Doug Brown (pictured) to discuss a range of issues including the strength of the underlying guarantee in the protected fund and compensation under the Financial Services Compensation Scheme.