American International Group’s (AIG) directors and officers’ insurers will pay $150 million to resolve legal disputes with former company executives.

The $150 million settlement resolves five of the seven separate derivative actions filed in the Southern District of New York between 2004 and 2005, which were consolidated into a single action (the New York 2004/2005 Derivative Litigation), according to AIG.

AIG said it entered into the settlement agreement with the parties to the derivative litigations Aug. 25, 2010, when it submitted the settlement to the Delaware Court of Chancery.

AIG said the claims will be paid under its $200 million 2004-2005 D&O insurance tower; $90 million will go to AIG (after fees to the plaintiffs lawyers) to settle derivative claims and $60 million would be used to cover attorneys’ fees and expenses incurred by former CEO Maurice “Hank” Greenberg and Howard Smith, former chief financial officer.