AIG AGREES TO PAY 65M IN SETTLEMENT WITH NY REGULATORS

AIG has agreed to pay $35m to settle allegations by the New York Department of Financial Services that former subsidiaries American Life Insurance (Alico) and DelAm had sold insurance in the state to multinational companies without proper licensing. Regulators said that Alico had made “intentional misrepresentations and omissions” to the department in 2009, when, while still an AIG subsidiary, it said that it conducted no insurance operations in the state except for minor “back office functions”. The DFS said that its investigation showed that New York sales staffs of Alico and other alien insurers had in fact collected around $900m in premiums from multinational companies without proper licensing between 2007 and 2012. “No company has the right to ignore the laws that every other insurer has to follow”, said DFS superintendent Benjamin Lawsky. “This type of conduct is unfair to its competitors and puts consumers at risk. We are pleased that AIG has decided to resolve this matter”. The locally based group said that it agreed to the settlement “to avoid the distraction and expense of ongoing litigation”. The settlement comes seven months after MetLife agreed to pay $60m - $50m to the DFS and $10m to the Manhattan District Attorney - to resolve similar allegations of unlicensed insurance activities. MetLife had bought Alico and DelAm from AIG in 2010. MetLife’s settlement marked the largest fine ever levied against an insurer in the state.