Judge Christopher Droney also imposed a $200,000 fine on Christian Milton, who was convicted last year of conspiracy, mail fraud, securities fraud and making false statements to the Securities and Exchange Commission, the Associated Press reports.
The prosecution's case had argued that Mr Milton had taken part in a scheme whereby AIG secretly paid General Reinsurance to take out reinsurance policies with the company in 2000 and 2001.
Although Mr Milton did not directly benefit from the fraud, federal attorneys contested that he had a financial motive because his deferred compensation package was linked to the value of AIG's stock.
Judge Droney said: "He surely knew this was a scam from the very start. This was no momentary lapse in judgment."
Four former General Reinsurance executives have already been convicted for their role in the scheme. In December, ex-chief executive Ronald Ferguson was sentenced to two years in prison and a $200,000 fine for his part in the fraud.