Regulators investigating AIG for cheating NY state|
Attorney General Spitzer investigating improperly booked premiums
April 26, 2005
NEW YORK (Reuters) - New York regulators are investigating whether American International Group wrongly pocketed tens of millions of dollars that should have gone to a state workers' compensation fund, putting even more of the insurance company's accounting under scrutiny.
New York Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills said in a statement Tuesday that they are looking into whether AIG improperly booked premiums it collected on workers' compensation policies during the 1990s. If so, AIG could have been cheating the state out of tens of millions of dollars a year.
At issue is whether AIG booked premiums it received for workers' compensation policies as premiums for general liabilities. Such a practice would allow it to avoid paying its true share into various workers' compensation funds run by the state.
The conduct appears to have taken place for over a decade, and continued even after AIG insiders repeatedly challenged its legality, the regulators said.
An AIG spokesman said the company is "committed to being as cooperative as possible" with regulators.
"The practice referenced in this press release largely had been corrected by 1997," the spokesman said.
Spitzer and Mills said they would hire a consultant to conduct an audit to determine how much of this money -- if any -- should be paid back to the state's workers' compensation funds. Workers' compensation is paid to employees who have been hurt or disabled on the job.
New questions about AIG's accounting come just days before it is due to belatedly file its annual report. The company has said it plans to file the 10-k by April 30, after delaying it while it undertook an internal investigation of its accounting.
AIG's review is covering much the same ground as probes by Spitzer and the Securities and Exchange Commission, which sources have said are examining everything from reinsurance deals with offshore entities to the suspect accounting for a transaction with Berkshire Hathaway Inc.'s General Re.
Spitzer has said he expects to reach a civil settlement with AIG rather than bring criminal charges, but has not made clear whether or not he would indict Maurice "Hank" Greenberg, the former chairman and chief executive of AIG.
Meanwhile, AIG's internal report is said to have uncovered at least $1 billion more in accounting problems, The New York Times reported Tuesday.