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State announces AIG settlement

POSTED: February 28, 2011 5:07 p.m.

ATLANTA—Insurance Commissioner Ralph T. Hudgens said Georgia stands to collect more than $1 million pending a multi-state settlement with American International Group, Inc. (AIG). The settlement comes after a nationwide examination of the company’s compliance with premium reporting rules.

Most of the money — about $1.7 million — would be Georgia’s share of the $100 million fine to be paid to all 50 states and the District of Columbia, with additional taxes of about $18,000.

“The purpose of this settlement is to resolve violations, wherein AIG incorrectly reported its income from workers’ compensation premiums across the United States, including in Georgia, years ago,” Hudgens said. “All reports indicate that AIG has cooperated fully with the investigations into its practices, but frankly, Georgia expects better going forward.

“As part of this settlement, AIG will be making special reports to the states involved, and the company will pay an even larger fine if they don’t comply with regulations in the future.” said Hudgens, referring to the additional fines of up to $150 million the company has agreed to pay if it does not meet the terms of compliance listed in the settlement.

Specific requirements of the settlement include:

The agreed-upon $100 million fine, divided among all 50 states and the District of Columbia;

About $46.5 million in other taxes and assessments, also divided among the   states and D.C.;

A plan with specific steps and evaluations for AIG’s future compliance with regulations;

Periodic internal and state monitoring, with a confirmatory examination after 24 months; and

A contingent fine of up to $150 million if AIG fails to meet the terms of compliance.

“A number of Georgians do business with AIG,” Hudgens said, “and as it stands, the company has about $2.1 billion in premiums they have to restate by March 1. I plan to make sure AIG is complying with our regulations and we don’t have problems like this again.”

The settlement will need approval by at least 42 jurisdictions to become effective.

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