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By Jonathan Stempel NEW YORK (Reuters) - The storm over the U.S. insurance industry took a new turn Thursday when American International Group Inc. (AIG.N: Quote , Profile , Research ) said a federal grand jury is investigating products it sold that companies might have used to massage earnings. Meanwhile, insurance broker Marsh & McLennan Cos. (MMC.N: Quote , Profile , Research ) , so far the main focus of the industrywide scrutiny, got more bad news when Standard & Poor's cut its credit rating and said more cuts are possible. New York-based AIG, the biggest insurer by market value, said the Indiana grand jury probe centers on a contract with cell phone distributor Brightpoint Inc. (CELL.O: Quote , Profile , Research ) . The U.S. Securities and Exchange Commission had accused AIG of helping Plainfield, Indiana-based Brightpoint fraudulently conceal losses with the policy. AIG settled the matter last September for $10 million. AIG disclosed the investigation one week after New York Attorney General Eliot Spitzer accused Marsh of rigging bids and colluding with AIG and other insurers to fix prices. "I cannot explain why this arose now," said AIG Chairman Maurice "Hank" Greenberg in a conference call, referring to the Indiana probe. "We're not looking for a fight. We've never done that. But the timing (was) certainly not by accident, given that we are putting out earnings today." AIG said third-quarter profit rose 8 percent to $2.51 billion, or 95 cents per share, from $2.34 billion, or 89 cents, as higher premiums helped offset $512 million of claims from four hurricanes and three typhoons. Excluding investment losses, profit was 97 cents per share, matching the average analyst forecast according to Reuters Estimates. AIG said the grand jury is examining "nontraditional" and "income smoothing" products AIG marketed that looked like insurance, but did not actually transfer risk. The company separately faces investigations by the SEC and U.S. Justice Department into charges it helped Pittsburgh-based PNC Financial Services Group Inc. (PNC.N: Quote , Profile , Research ) , Pennsylvania's largest bank, move bad loans off its books to inflate profit. Greenberg said the investigations are not distracting management from running the company. MARSH Continued ...
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