AIG to Pay New York Regulator $35 Million Penalty
November 3, 2014 by Michael Buck
NEW YORK – American International Group Inc. will pay a $35 million penalty to the New York Department of Financial Services for insurance law violations related to two former subsidiaries, the regulator said in a statement.
The fine is related to two of AIG’s former subsidiaries, American Life Insurance Co. and Delaware American Life Insurance Co., both of which it sold in 2010 to MetLife Inc. The DFS said in 2009, while operating as an AIG subsidiary, Alico made intentional misrepresentations and omissions to state regulators about its business activity.
Specifically, Alico told state regulators there were “no insurance operations conducted in New York,” the DFS said in a statement. Alico said its business in the state was essentially “back office functions,” the statement said. But, the DFS said an investigation showed Alico’s activities went “well beyond engaging in back office function” and Alico and DelAm were doing business in New York without a license.
“No company has a right to ignore the laws that every other insurer has to follow,” New York Superintendent of Financial Services Benjamin Lawsky said in a statement. “This type of misconduct is unfair to its competitors and puts consumers at risk. We are pleased that AIG has decided to resolve this matter.” Attempts to reach wo representatives for AIG were not immediately successful.
MetLife in March paid a $60 million fine in connection a DFS investigation into Alico and DelAm (Best’s News Service, March 31, 2014). It was following that settlement that the DFS said it was investigating AIG.
The DFS consent order with AIG also calls for AIG to voluntarily dismiss its lawsuit against Lawsky, which the company filed following the MetLife settlement.
Rated AIG companies currently have a Best’s Financial Strength Rating of A (Excellent), while Metropolitan Life Insurance Group companies are currently rated A+ (Superior). Shares of American International Group (NYSE: AIG) closed trading Oct. 31 at $53.57, up 1.21% from the previous close.