Four former senior executives of Berkshire Hathaway's General Re Corp. and a former senior executive of American International Group Inc. have been indicted on charges they participated in a scheme to manipulate AIG's financial statements, said prosecutors.

The indictment alleges that the defendants engaged in a fraudulent scheme to make it appear as if AIG - one of the world's largest insurance companies - increased its loss reserves, a key financial indicator to analysts and investors.

At issue are two reinsurance transactions between AIG and Gen Re that were initiated by an AIG senior executive to quell criticism by analysts of an approximate $59 million reduction in AIG's loss reserves in the third quarter of 2000, prosecutors said. The phony transactions made it appear as though AIG had increased its loss reserves by $500 million, authorities said.

The alleged conspiracy, using phony contracts and a secret side deal, was designed to make it appear that AIG's loss reserves were growing to inflate the company's stock price in 2000 and 2001, prosecutors say.

The former General Re executives charged were Ronald E. Ferguson; Elizabeth Monrad; Robert Graham; Christopher P. Garand and Christian Milton. All of the defendants except Garand had been charged in February in Virginia in connection with the alleged scheme and pleaded not guilty.

The case later was transferred to Connecticut, where the defendants face additional charges. The Securities and Exchange Commission has filed a related civil lawsuit. A trial has been scheduled for March 1st 2007.