NU Online News Service, June 4, 1:45 p.m. EDT
American International Group will pay a total of $146.5 million to states to settle a probe that examined whether the insurer violated premium-reporting rules governing workers' compensation insurance.
The state of Pennsylvania, a lead state in the probe, says it will receive more than $16.8 million in fines and assessments as part of the settlement, which the state's insurance department says is the largest fine levied in the agency's history. Pennsylvania says its share breaks down to $8.6 million in fines, $3.6 million to the state's Workers' Compensation Security Fund and $4.6 million in premium taxes and assessments.
Rosanne Placey, spokesperson for the Pennsylvania Insurance Department, says the recent announcement finalizes a settlement agreement from 2010. She notes that part of what held up the settlement was a disagreement between AIG and Liberty Mutual over a $450 million settlement AIG reached last year with other private insurers to resolve the same matter. Placey says it was ultimately agreed that the matter between Liberty Mutual and AIG should not hold up the settlement with the states.
In a statement, Pennsylvania Insurance Commissioner Michael Consedine says, "State insurance regulators must be able to rely on accurate company financial data. In AIG's case, we found that the companies, which operated in a pooled arrangement, had underestimated their liabilities under inter-company policyholder guarantees."
He adds, "As part of this agreement, AIG corrected previously filed financial reports and reallocated approximately $2.1 billion of premium from other lines of insurance to workers' compensation."
AIG says in a statement sent via email that the probe focused on allegations of conduct taking place between 1975 and 1996, the same period that was the subject of a 2006 regulatory settlement between AIG and the state of New York. AIG spokesman James Ankner says in the emailed statement, "We are pleased that with this settlement now becoming final, we have resolved all remaining regulatory issues related to AIG's workers' compensation premium reporting for our stakeholders. The settlement represents AIG's unwavering commitment to regulatory compliance and principled corporate governance."
Additional reporting by Chad Hemenway
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