AIG Unit Owes $517 Million, California Insurance Regulator Says Jan. 7 (Bloomberg) -- An American International Group Inc. unit must pay reinsurance of more than $517 million to workers’ compensation insurers in liquidation after losing its appeal of an arbitration award, a California regulator said. AIG’s U.S. Life Insurance Co. was reinsurer for five California workers’ compensation insurance companies that were liquidated in 2000, state Insurance Commissioner Steve Poizner said yesterday in an e-mailed statement. U.S. Life said the insurers didn’t disclose pertinent information about the adequacy of its reserves for claims payments, Poizner said. The U.S. Court of Appeals in San Francisco on Jan. 4 upheld the award against U.S. Life. While the arbitration panel used an unusual process of meeting with workers’ compensation experts it retained in deciding the case, the reinsurer received a fair hearing and the panel didn’t violate federal arbitration rules, the appeals court said in its ruling. “Upholding this award means that hundreds of millions of dollars will be available to pay the claims of workers injured on the job through the California Guarantee Association and other guarantee associations,” Poizner said in the statement. A federal court entered a judgment of $443 million against U.S. Life in 2007 when it challenged the arbitration award. The judgment now totals more than $517 million with interest included, according to Poizner. Once money is collected from U.S. Life or from a $600 million bond that AIG posted as security, it will be used to repay the guarantee associations, Poizner said. Mark Herr, a spokesman for New York-based AIG, had no immediate comment. AIG, once the world’s largest insurer, received a $182.3 billion bail-out package in 2008 from the U.S. government after losses tied to housing markets. U.S. Life can seek a review of the ruling or ask that a larger panel of appeals court judges rehear the case, Poizner said. The case is U.S. Life v Superior National Insurance Co., 07-55938, 9th U.S. Circuit Court of Appeals (San Francisco). To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net. Last Updated: January 7, 2010 00:01 EST http://www.bloomberg.com/apps/...pid=newsarchive&sid=asW6orBFrspY |