FBI and regulators confer on AIG probe
Indianapolis Star and news service
May 6, 2005
The FBI met Thursday with state insurance regulators as it probes whether accounting improprieties such as those revealed by American International Group Inc. are pervasive in the industry.
The FBI, which Wednesday announced a broad investigation into insurance fraud, convened in New York with regulators including the New York Insurance Department and the National Association of Insurance Commissioners, spokesmen for the regulators said.
The meeting underscores the increased scrutiny of the industry as AIG, the world's largest insurer, moves to correct improper accounting that overstated its net worth by $2.7 billion.
At least 13 insurers have received subpoenas from New York Attorney General Eliot Spitzer and the Securities and Exchange Commission about nontraditional reinsurance that may be abused to hide losses.
"We understand the FBI is seeking to determine whether the accounting practices recently identified represent an industrywide concern," said Diane Koken, president of the National Association of Insurance Commissioners.
The group unites individual state superintendents who have oversight of the industry. There is no federal regulator.
Jim Atterholt, commissioner of the Indiana Department of Insurance, said his agency has heard from the FBI. He acknowledged that the AIG matter needs to be investigated, but worried that the government might overreact.
"I don't think it is a broad problem. And we want to make sure that the AIG decision doesn't hurt companies that (perform) honorably," Atterholt said.
Conseco Inc., one of the largest insurers based in Indiana, said the AIG case does not apply to it because Conseco has not participated in any financial reinsurance arrangements, according to spokesman Jim Rosensteele.