AIG Settles With Treasury After Cuba Sanctions Breaches
May 9, 2014 by Jeff Jeffrey
WASHINGTON – American International Group Inc. has agreed to a $279,038 settlement with the U.S. Treasury Department over allegations the company violated long-standing sanctions on Cuba.
Treasury alleged two AIG subsidiaries in Canada ran afoul of Cuban assets control regulations more than 3,500 times. The total base penalty amount for the apparent violations was $413,390, according to a statement from Treasury.
Between January 2006 and March 2009, two of AIG’s Canadian subsidiaries issued or renewed three types of property/casualty insurance policies that insured Cuban risks of a Canadian corporate entity for an estimated aggregate premium of $486,137.71.
The polices involved comprehensive general liability, directors and officers excess liability, and pollution legal liability coverages, Treasury said.
One of the AIG subsidiaries in Canada also maintained a D&O Liability insurance policy that insured certain directors and officers of three Cuban joint venture partners of a Canadian corporation between Jan. 1, 2006 and Oct. 4, 2006. The total premiums for those policies was $55,578.08, Treasury said.
Separately, between March 17, 2006 and Sept. 30, 2008, Travel Guard Canada, an AIG subsidiary in Canada, sold, renewed, or maintained 3,446 multi-trip travel insurance policies in which the insured identified Cuba as the travel destination. The total premium collected for these policies was $337,973.25. Travel Guard Canada paid 103 claims for a total value of $96,910.47, according to Treasury.
AIG voluntarily disclosed the apparent violations, and Treasury deemed them to be “non-egregious.” Efforts to reach AIG for comment were not immediately successful.
Last month, four U.S. insurers — Chubb Corp., CNA Financial, Liberty Mutual and Navigators Group — were subpoenaed by the New York Department of Financial Services as part of an investigation into potential violations by the companies of sanctions against Iran. The subpoenas sought information concerning the companies’ dealings with Swiss-based commodities firm Glencore Xstrata, which conducts trade in metals with Iran. Sanctions against Iran have been imposed by the United States and other nations because of concerns Iran is using metals to develop nuclear weaponry (Best’s News Service, April 9, 2014).
Midday May 9, shares of AIG (NYSE: AIG)were trading at $52.11, down 0.50% from the previous day’s closing price.
(By Jeff Jeffrey, Washington Bureau manager: jeff.jeffrey@ambest.com)
