NY to Sue Some Insurers for
October 14, 2004
NEW YORK (Reuters) - New York Attorney General Eliot Spitzer on Thursday sued several prominent participants in the insurance industry, including AIG and broker Marsh & McLennan Cos. (MMC), charging they engaged in market manipulation.
Companies named in the lawsuit include Hartford Financial Services Group (HIG), American International Group (AIG), ACE Ltd (ACE), and a unit of Munich Re , according to a press release on Spitzer's Web site.
The charges center around a practice known in the insurance industry as "contingent commissions", essentially payments by insurance companies to Marsh in exchange for business from the world's largest insurance broker, the AG's office said.
The attorney general's office said its review of documents from 2003 found that Marsh collected $800 million in these contingent commissions.
The AG's office also said two executives from AIG and one executive from ACE have pleaded guilty to criminal fraud charges for their involvement in the alleged manipulation.
Spitzer will hold a news conference at 1230 EST on Thursday where he will "announce a major corruption case involving the insurance industry."
Shares of the named companies fell sooner after reports of the suit emerged.
Shares of Marsh & McLennan were off 7.9 percent, while AIG fell 4.8 percent and ACE dropped 3.6 percent. Shares of Hartford were down 4.1 percent.
Hartford and ACE all declined to comment while Marsh and AIG could not be immediately reached for comment.
© 2004 Reuters