Chubb faces Ohio suit on commissions, finite reinsurance
By Lavonne Kuykendall
May 8, 2006
CHICAGO (MarketWatch) -- Chubb Corp. (CB) said Friday that Ohio Attorney General Jim Petro intends to file an action against Chubb and other companies following an investigation into the insurance industry's practice of paying contingent commissions to brokers and agents and also into loss mitigation and finite reinsurance arrangements.
In a filing Friday with the Securities and Exchange Commission, Chubb also said it has received subpoenas from attorneys general and insurance regulators of several states and foreign regulatory authorities, the SEC and the U.S. Attorney for the Southern District of New York over the same issues.
"Although no regulatory action has been initiated against the corporation, it is possible that one or more regulatory authorities will bring an action against the corporation with respect to some or all of the issues that are the focus of these ongoing investigations," the filing said.
Chubb is already the subject of several class actions regarding contingent commissions to brokers and agents. The company said it has "substantial defenses to all of the aforementioned legal proceedings and intends to defend the actions vigorously."
The announcement follows separate civil lawsuits brought Friday against Liberty Mutual Group (LMG.XX) by New York Attorney General Eliot Spitzer and Connecticut Attorney General Richard Blumenthal, alleging that the Boston insurer engaged in a bid-rigging scheme tied to the payment of contingent commissions.
Liberty Mutual also said it would defend itself against the allegations.
In 2005, insurance brokers Marsh & McLennan Cos. (MMC), Aon Corp. (AOC) and Willis Group Holdings Ltd. (WSH) paid settlements to New York in 2005 over their acceptance of contingent commissions from insurers.
A spokesman for Chubb said he couldn't answer questions about the filing.
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