American International Group will pay a record $1.64 billion to settle state and federal charges of securities fraud, bid-rigging and failure to pay proper contributions to various state workers' compensation funds, state and federal regulators announced today.
The settlement with New York Attorney General Eliot Spitzer, New York Insurance Superintendent Howard Mills and the Securities and Exchange Commission also calls for changes in business practices by the nation's largest insurer.
In its agreement, AIG agreed to cut back on the use of contingent commissions and will not pay them on excess casualty lines through 2008. Mr. Spitzer has charged that hidden, volume-based bonus commissions to brokers essentially served as insurer kickbacks for steering business and incentives for rigging bids.
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