The US insurer, rescued last year with more than $180 billion of taxpayers’ money, will reimburse legal fees of up to $150 million for Mr Greenberg and Howard Smith, AIG’s former chief financial officer, subject to a review by an independent third party.

The problems of AIG hit wealth management clients when AIG funds sold to investors were hit by losses. For example, the AIG Life Enhanced Fund, into which UK investors had sunk around £5 billion ($8.2 billion), was frozen in September 2008 and subsequently closed two months later.

The US lawsuit settlement also covers CV Starr, an insurance firm headed by Mr Greenberg that underwrote some of AIG’s business, and Starr International Company, his private investment group. Mr Greenberg will retrieve photographs of himself with Cornelius Vander Starr, the group’s founder, and with Chinese authorities in AIG’s Shanghai building.