AIG (NYSE:AIG) recently received approval from a federal judge for a $450 million settlement between the company and a group of its rivals over the alleged under-reporting of premiums on workers’ compensation policies. AIG agreed to pay the sum to settle allegations that it incorrectly reported the size of its workers’ compensation business to state insurance regulators which resulted in AIG making lower contributions to state-mandated pools covering injured workers without private coverage. [1] AIG is the one of the largest insurance companies in the U.S. and competes with MetLife (NYSE:MET), Hartford Financial (NYSE:HIG), Prudential Financial (NYSE:PRU) and Manulife Financial (NYSE:MFC).
See our complete analysis of AIG here
We have a price estimate of $19.72 on AIG’s stock, about 15% below the current market price.
AIG was sued by Liberty Mutual Group in 2009 before other insurers stepped into the case.
In January 2011, a settlement was reached between AIG and seven other insurers but the deal was opposed by Liberty Mutual Group which saw it as inadequate and detrimental to the interests of hundreds of insurance companies. The settlement recently got approval from a federal judge but Liberty Mutual anticipates an appeal. Among the beneficiaries of this settlement are Travelers (NYSE:TRV) and Hartford Financial.
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Notes:- AIG Wins Approval for $450 Million Workers’ Comp Settlement, WSJ, Dec 27, 2011 [↩]
