A total of seven companies are poised to receive money as part of the deal, which comes after more than a year of legal wrangling. Safeco Insurance and Ohio Casualty Insurance first filed legal action against AIG in 2009.
However, both Safeco and Ohio Casualty - subsidiaries of Liberty Mutual - have declined AIG's offer and are expected to continue to pursue the case. The companies had initially sought more than $1 billion in damages.
"It is unfortunate that Liberty is refusing to participate in this fair and reasonable settlement," said AIG spokesman Mark Herr. "Liberty's preference to continue litigating is not in the best interests of the class members."
The news came after Reuters reported that the US government was preparing to audition bankers to conduct a public offering of its stake in AIG.
By Asim Shah