AIG to pay Ohio $9 Million Settlement

[samplegirl]

Settlement stems from lawsuit in which state alleged that insurers colluded to fix prices
Thursday, April 8, 2010
By James Nash
THE COLUMBUS DISPATCH

http://www.dispatchpolitics.com/live/content/local_news/stories/2010/04/08/copy/aig-to-pay-ohio-9-million.html?type=rss&cat=&sid=101&title=AIG+to+pay+Ohio+%249+million


Ohio universities, schools and cities will get $9 million from a giant insurance company accused of conspiring with its rivals to rig prices, state Attorney General Richard Cordray announced yesterday.

The state has settled a 2007 lawsuit against American International Group, which grew to become the world's largest insurer before it was vilified for allegedly cheating investors and policy holders over the past decade. The company received a massive federal bailout in September 2008.

Ohio's lawsuit accused AIG of colluding with Marsh & McLennan Co. and other insurers to set artificially high commercial-casualty premiums. Ohio settled a securities-fraud case against Marsh & McLennan for $400 million last year. The state still has a securities-fraud case pending against AIG.

Cordray said e-mail messages and other evidence clearly show that AIG, Marsh & McLennan and three other insurance companies divided up the commercial casualty market and inflated prices by producing phony bids, among other tactics.

The lawsuit, which was initiated by former Attorney General Marc Dann, covered the period from 2001 to 2004. Cordray said there's no evidence the alleged anti-competitive practices are continuing.

"The evidence in this case is strong, the behavior absolutely deplorable," said the attorney general, who inherited the case when he took office in early 2009.

Cordray said his office continues to pursue Wall Street malefactors and expects "substantial further recoveries."

In a written statement, AIG reiterated its contention that it had not broken Ohio laws.

"We have settled to avoid the expense and uncertainty of protracted litigation concerning events from 2004 and earlier," company spokesman Mark Herr said. "This will allow us to continue to focus on strengthening our businesses and repaying the American taxpayer."

Herr suggested that the company would continue to fight the securities-fraud case, in which the state argues that Ohio pension funds were cheated by fraudulent accounting that fueled the firm's Wall Street collapse.

AIG already has set aside $800 million to compensate investors who were harmed by the alleged practices, Herr said.

"Any additional payments would come at the expense of the American taxpayer and would enrich the plaintiffs' lawyers litigating these claims," he said.

Twenty-six units of government across Ohio will share in the $9 million settlement announced yesterday, Cordray said.

The largest share, $1.2 million, will go to Ohio State University.

The Columbus Regional Airport Authority, Franklin County Convention Facilities Authority, Rickenbacker Port Authority and three state pension systems also will receive money.

The Ohio Republican Party issued a statement questioning the attorney general's use of private lawyers to handle parts of complex lawsuits.

"While it's always good to see more money going to local government, Richard Cordray still must answer this question: How much money per hour did these attorneys receive and how many of these attorneys have donated to the Democratic Party to help Marc Dann and Richard Cordray?" party chairman Kevin DeWine asked.