Florida Seeks 'Answers': AIG Entities Ordered to Provide Detailed Information
The Insurance Journal
May 19, 2005
The Florida Office of Insurance Regulation (OIR) has joined the ever-increasing tide of regulatory bodies seeking answers from American International Group Inc. (AIG). AIG operates 43 licensed insurance entities in the State of Florida. The office has issued an order to these companies that they must turn over information regarding AIG's admitted misrepresentations on financial statements.
OIR said the financial community has been rocked with the results of investigations by the Securities and Exchange Commission (SEC) and other regulatory bodies which have led to subsequent admissions by AIG that certain reinsurance transactions were misrepresented on the company's financial statements. AIG's admissions appear to indicate violations of both federal and state laws.
In a May 1 press release AIG announced "that it is nearing completion of the extensive internal review of its books and records conducted in connection with the preparation of its 2004 Annual Report on Form 10-K. The findings of that review, together with the results to date of investigations conducted by outside counsel at the request of AIG's Audit Committee and in consultation with AIG's independent auditors, PricewaterhouseCoopers, have resulted in AIG's decision to restate its financial statements for the years ended December 31, 2003, 2002, 2001 and 2000, the quarters ended March 31, June 30 and September 30, 2004 and 2003 and the quarter ended December 31, 2003.
"AIG's prior financial statements for those periods and its previously announced unaudited financial results for the year and quarter ended December 31, 2004 should therefore no longer be relied upon.... The restatement will correct errors in prior accounting for improper or inappropriate transactions or entries that appear to have had the purpose of achieving an accounting result that would enhance measures important to the financial community and that may have involved documentation that did not accurately reflect the nature of the arrangements. In certain instances, these transactions or entries may also have involved misrepresentations to members of management, regulators and AIG's independent auditors."
DOI's order requires the AIG companies to report on the nature and extent of these misrepresentations and identify and remove any parties culpable in this matter. The order also requires AIG to file, by July 1, 2005, true and correct financial statements for the years of 2000 through 2005 for all AIG entities licensed in Florida.
Failure to comply with the Order may lead to the suspension of AIG's licensed companies in Florida and other potential action against these companies and affiliated parties to enforce compliance with the laws of the State of Florida.