AIG Settles with Michigan for More than $5.2 Million
The Insurance Journal
March 3, 2006
Attorney General Mike Cox reported Friday that American International Group Inc. and its subsidiaries ("AIG") have paid more than $5.2 million to the State of Michigan, representing the underpayment, with interest, of workers' compensation premium taxes and related fees and assessments for the tax years 1985 to 1996.
Michigan's apportioned share of the workers' comp premium tax underpayment is second highest in the nation, according to the settlement documents.
Cox applauded the decision of AIG to settle its differences with federal and state regulators saying: "Everyone, including insurance companies, must meet their obligation to pay their taxes and report financial data correctly. I am pleased to announce that Michigan is being reimbursed what it is owed, especially in these lean budget times."
The $5,279,484.00 paid to the Michigan Department of Treasury by AIG is part of a $1.6 billion settlement for fraud and improper accounting that AIG entered into with the New York State Insurance Department, the New York Attorney General, the Securities and Exchange Commission ("SEC"), and the United States Department of Justice.
AIG will pay states $343.5 million for underpayment of workers' comp premium taxes and residual market assessments. In reaching the settlement, AIG acknowledged misconduct over a period of years and adopted a series of reforms to its business operations.
In addition, AIG has paid $301.2 million into a fund to settle claims with respect to its underpayment of workers' comp residual market assessments for tax years 1985 to 1996. The amount has been apportioned to each state, including interest.
According to a March 1, 2006 letter to Cox, AIG states that Michigan will be entitled to receive an additional $2,620,873 from this separate fund. The states have one year to accept the settlement amount or pursue their own settlements with AIG.
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