AIG agrees $9m settlement in Ohio lawsuit
AIG has agreed to pay $9m to settle an antitrust lawsuit stemming from bid-rigging allegations with the Ohio department of insurance.
The suit, filed in 2007, charged that AIG conspired with broker Marsh and other insurers, said to be The Hartford and Chubb, to eliminate competition in the commercial casualty insurance industry. Ohio attorney general Richard Cordray said the insurers and Marsh had agreed to provide customers with false quotes, creating the impression that “competitive bidding had produced the best possible price,” during a period between 2001 and 2004.
The complaint named several AIG subsidiaries including American Home Assurance Co, Chartis Casualty Co, Commerce and Industry Insurance Co, Hartford Steam Boiler Inspection & Insurance Co, National Union Fire Insurance Co of Pittsburgh, and others.
The $9m will be a blow to AIG, which is striving to pay back its government debt, not spend more money.
The insurer denies wrongdoing, but an AIG spokesman said it had agreed to the settlement to avoid the uncertainty and expense of protracted litigation. “This will allow us to continue to focus on strengthening our businesses and repaying the American taxpayer,” AIG said.
The funds will be distributed to 26 public entities throughout the state of Ohio, including universities, schools and cities.
AIG has settled similar allegations with New York for $375m, and with attorneys general of Florida, Hawaii, Maryland, Massachusetts, Michigan, Oregon, Pennsylvania, Texas, West Virginia and the District of Columbia.
It may not be the end of the issue for AIG, however, as Cordray’s office said it will continue to pursue a separate class action securities fraud suit against the firm, filed on behalf of several Ohio state pension funds.
Separately, AIG has confirmed the addition of Henry Miller, chairman and co-founder of New York boutique investment bank Miller Buckfire & Co, to its board of directors.
His proposed appointment was hinted earlier in the week when the US treasury department named Donald Layton and Ronald Rittenmeyer as company directors (Insuranceday.com, Apr 6).
The treasury has the right to appoint new AIG directors because the insurer missed four of the quarterly dividend payments that government collects from most bailed-out companies.
