UPDATE 2-AIG wins dismissal of $34.4 mln award for AXA

* Appeals court says AXA waited too long to sue

* AXA has no immediate comment; AIG declines to comment

* Shares of AIG rise 32 cents to $35.49

By Jonathan Stempel
(Adds details, background, quote from court opinion, share
move)

NEW YORK, Aug 23 (BestGrowthStock) – American International Group
Inc (AIG.N: ) won the dismissal of a $34.4 million judgment in a
lawsuit accusing it of fraudulently inducing an AXA SA
(AXAF.PA: ) affiliate to enter two reinsurance contracts.

While rejecting AIG’s claim that the case should have been
arbitrated, the U.S. 2nd Circuit Court of Appeals on Monday
said AXA waited too long to sue — more than five years after
being put on notice that something might be amiss. It directed
a lower court to enter a judgment in favor of AIG.

The ruling frees additional money for New York-based AIG as
it tries to repay taxpayers after a series of bailouts that
left the government owning a nearly 80 percent stake in the
insurer.

AXA had no immediate comment. AIG spokesman Mark Herr
declined to comment.

AXA Versicherung AG sued AIG on Dec. 2, 2005, claiming that
AIG units in 1997 and 1998 fraudulently induced a predecessor
into entering the contracts, which concerned energy risks.

A jury found that AXA could not have learned of the alleged
fraud before Dec. 2, 2003, meaning its lawsuit complied with a
New York law requiring a claim be filed within two years of the
discovery of a fraud, or within six years of a fraud’s taking
place.

The appeals court, however, agreed with AIG that AXA had
signed documents putting it on notice of a possible problem as
early as August 1998, and no later than September 2000. This,
it said, made the December 2005 lawsuit untimely.

“AXA was confronted with a clear ‘storm warning,'” the
court said in an unsigned opinion.

“Had AXA actually read the 1998 wordings, as the law
expects, AIG’s concurrent and future misrepresentations should
have only served to heighten AXA’s awareness that something was
amiss,” it went on. “AXA’s failure to carefully read the
wordings is legally irrelevant.”

Also on Monday, AIG said it had paid back nearly $4 billion
of U.S. loans, reducing the size of a federal credit facility
by that amount to about $30 billion. [ID:nN23192452]

AIG stock was up 32 cents at $35.49 in afternoon trading.

The case is AXA Versicherung AG v. American International
Group Inc et al, U.S. Second Circuit Court of Appeals, No.
08-2521.
(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn and
John Wallace)

UPDATE 2-AIG wins dismissal of $34.4 mln award for AXA