American International Group Inc., (AIG:US) the insurer that counts the U.S. as its largest shareholder, will pay $300 million after state reviews into whether the company held funds that should go to beneficiaries.
The figure was released by Jacob Roper, a spokesman for California Controller John Chiang, whose office said in a statement earlier today that beneficiaries in the state will get $25 million to $30 million from the New York-based insurer. California is the largest U.S. state by population.
Insurers have faced increased scrutiny from regulators over unpaid benefits. Watchdogs including Chiang said in April that MetLife Inc. (MET:US), the largest U.S. life insurer, would pay about $500 million as part of a multi-state settlement. MetLife and AIG have agreed to use the Social Security Administration’s Death Master File to determine if policyholders have died, after regulators said the industry failed to identify instances in which beneficiaries were entitled to funds.
“For decades, too many insurers have fleeced their policyholders,” Chiang said in the statement.
AIG’s third-quarter results will include a $55 million addition to reserves tied to state probes, the company said in a statement. The company said it has already paid more than $100 million to more than 22,000 beneficiaries in connection with a review begun last year to identify its obligations.
The insurer said in August of last year that it increased reserves by $100 million in the second quarter after changing its process for determining when policyholders died. James Ankner, a spokesman for the company, declined to comment.
AIG dropped 15 cents, or 0.4 percent, to $35.55 in New York. The company has advanced 53 percent this year as the U.S. sold shares to lower its stake.
To contact the reporter on this story: Susanna Pak in New York at Spak10@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at email@example.com