Former AIG CEO Maurice “Hank” Greenberg will now stand trial for damages over an allegedly fake reinsurance transaction after his bid to have it thrown out of court was denied.

New York Attorney-General Andrew Cuomo claims Mr Greenberg helped the insurer hide $US200 million ($203.02 million) in losses from an auto warranty insurance program.

Supreme Court Justice Charles Ramos recently denied Mr Greenberg’s claim to have the lawsuit thrown out of court, saying there is enough evidence to move to trial.

The New York Times says Justice Ramo also found former CFO Howard Smith has a case to answer on the reinsurance transaction.

“The evidence establishes that the defendants’ stated objective in effecting the transaction was not to improve AIG’s assets, but to conceal from investors underwriting losses,” the judge said.

Both defendants are expected to appeal the decision.