American International Group Inc. will pay $13.5 million – including a record $9.1 million in penalties and investigative costs – to settle allegations of bid-rigging and financial misreporting brought by the state of Pennsylvania, company and state insurance officials said.
The settlement requires the company to provide annual reinsurance reports, maintain compensation disclosure rules for producers and make further compliance initiatives, the company said.
“Financial reporting must be accurate for us to protect insurance consumers and be certain that companies are solvent,” Acting Pennsylvania Insurance Commissioner Joel Ario said. “When there is any indication of problems with a company’s financial reporting, we investigate, take action and hold insurers accountable.”
The settlement includes $9.1 million in penalties and investigative costs, the largest-ever such payment to the state’s insurance department.
Approximately $4.4 million of the settlement has already been paid, AIG said in a statement.
The settlement is related to a reinsurance deal in 2000, that federal prosecutors alleged was part of a scheme to inflate AIG’s loss reserves, and thereby its stock price. Last month, four executives from Gen Re and one from AIG were convicted in federal court in Hartford for their role in the scheme.
In addition to the false reporting, the Insurance Department’s investigation of AIG focused on improper activity relating to their bid-rigging and commission practices.
The department said it is currently working with other states to examine misconduct on related to AIG’s having possibly underreported workers’ compensation premiums.
AIG has numerous Pennsylvania-based subsidiaries for which the state insurance department is the primary regulator.
The department has previously settled related bid-rigging allegations against broker Marsh Inc., Zurich Insurance Company, and ACE INA Holdings Inc.
Was this article valuable?
Here are more articles you may enjoy.