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Judge Gives AIG Initial Okay on $450 Million Workers Comp Settlement

Posted on 26 Jul 2011

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Insurer American International Group Inc. (AIG) said its plan to pay $450 million to resolve claims of cheating a workers’ compensation program was given preliminary approval by a U.S. judge.

“AIG is pleased that the court stated today that it will grant preliminary approval of the proposed settlement,” Mark Herr, a spokesman for New York-based

AIG, said in an e-mailed statement. The order couldn’t be immediately confirmed in court records. A clerk for U.S. District Judge Sidney Schenkier in Chicago declined to comment.

The settlement reached by AIG in January is less than a third of the amount requested by Liberty Mutual Holding Co. AIG was accused underreporting the amount of premiums it collected on workers’ compensation policies to reduce payments to an industry-funded backstop.

“We want to evaluate the judge’s written opinion before offering any comment,” said John Cusolito, a spokesman for Liberty Mutual, which sued AIG in 2009.