Former AIG boss Martin Sullivan and former AIG Financial Products executive Joseph Cassano are scheduled to testify on Wednesday before the US Financial Crisis Inquiry Commission. Mr Cassano led the London office of AIGFP, which put together high-risk credit default swaps as a form of insurance for mortgage-backed securities. Collateral calls on the swaps led to the near-fatal liquidity crunch at the insurer, leading to the US government bailout of the company in September 2008. Mr Sullivan was at the helm of AIG when the bulk of the swaps were sold and when the collateral calls began to threaten its survival. Also slated to appear before the commission this week are Goldman Sachs chief operating officer Gary Cohn and chief financial officer David Viniar. Goldman was a leading counterparty to AIG's swap deals and one of the leading beneficiaries of the government's bailout of AIG. Meanwhile, Senator Charles Grassley has written a letter to AIG seeking more information on generous severance packages that the company agreed last December for former chief compliance and regulatory officer Suzanne Folsom and former general counsel Anastasia Kelly. Mr Grassley said that Ms Folsom may not be eligible for more than $1m in severance pay because her severance agreement was executed after the government rescued the company. He also questioned Ms Kelly's "active role" in pushing for Ms Folsom's deal.

Congressional negotiators at the weekend hammered out a series of financial reforms that will, among other things, establish a new liquidation process for large financial firms to prevent sweeping bailouts like that implemented for AIG in September 2008. Lawmakers reached a compromise on the measures after a 21-hour negotiating session that lasted until early Friday morning. Final approval is expected this week. Under the new "orderly liquidation" rules, federal financial regulators will be able to seize and liquidate firms that are currently deemed too big to fail. In the current election cycle, incumbents have come under heavy criticism for backing large federal bailouts of AIG and other companies, even though many financial rescues were initiated prior to the last election in November 2008. Among other reforms agreed at the weekend, Wall Street investment banks will be required to spin off part of their derivatives operations. However, they will be permitted to retain some credit-default swaps and other derivatives to hedge their own risk. The reform package calls for $19bn in financing to be contributed by financial institutions.

... has said that its Montpelier Reinsurance unit has prevailed in an arbitration proceeding with Manufacturers Property & Casualty Ltd, resolving a dispute over two contracts under which Montpelier had bought reinsurance cover from MPCL in 2005. The arbitrator denied MPCL's motion to rescind the contracts and ordered the company to pay outstanding losses on the deals plus $2.5m in accrued interest.

A rise in insurance premium tax (IPT) from 5%/17.5% to 6%/20% is likely to raise £500m ($744m) over the next five years. The rates will rise from January 4 next year. The Budget report also said that new controlled foreign company (CFC) rules would be legislated in early 2012.