If finalized, the $100 million fine will be split among insurance regulators in 50 states and the District of Columbia. What's more, AIG will also will pay an additional $46.5 million in taxes and assessments largely to make up for its previous underreporting of premiums, the regulators said.
"We are pleased that if this settlement becomes final, we will have resolved all remaining regulatory issues related to AIG's workers compensation premium reporting for our stakeholders," the insurer said.
The fines are expected to end the states' examination of the way AIG calculated its workers compensation premiums. The size of the premiumsdetermined how much AIG had to pay into state-mandated pools that cover workers who can't get the coverage from the private sector, and into separate funds that pay out if insurance companies fail.
The examination found AIG misreported $2.12 billion of workers compensation premiums, classifying the premiums as general or commercial automobile liability premiums, according to a statement from the Pennsylvania Insurance Department, which led the examination. The state said the underreporting occurred primarily before 1996.
The settlement requires formal approval from a number of states, and won't be complete until AIG resolves litigation pending in federal court in Chicago with rival insurers over similar issues, the regulators' statement said.