What Has AIG Done Now? $500 Million Workers’ Comp Judgment
Insurance giant AIG has managed to stay out of the media spotlight for some time, but it has re-entered with news that its California life insurance subsidiary is on the hook for half a billion in workers’ compensation liability.
According to a ruling last week by the California appeals court, AIG is liable for around $517 million in California workers’ compensation reinsurance coverage and interest.
About the Case
According to reports, the AIG subsidiary, U.S. Life Insurance Co. is required to pay on its reinsurance coverage for five California workers’ compensation insurance companies that were liquidated in 2000.
This ruling against U.S. Life was originally made in 2007. However, U.S. Life appealed at the time, arguing that the insurers had failed to disclose pertinent information regarding the adequacy of outstanding reserves for the payment of claims. After over two years, on Jan. 6, 2010 the Circuit Court decided to uphold its judgment.
AIG’s Response to the Decision
So far, AIG has posted a $600 million bond as a security against the decision. However, California Insurance Commissioner Steven Poizner noted in a press release that interest on AIG’s judgment will continue to accrue until it is paid off.
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