American International Group Monday became the fifth life insurer to settle with state insurance regulators regarding the handling of unclaimed property.
Under the agreement, AIG will pay an $11 million fine to be divided amongst the states that join the settlement.
AIG officials also said that they had added $55 million during the third quarter to an existing reserve of $200 million related to the audits for interest and expected acceleration of benefit payments under the settlement.
The agreement was with 10 life insurance companies collectively referred to as AIG, according to Kevin McCarty, Florida insurance commissioner and president of the NAIC.
This includes early payment of policy proceeds under certain older industrial life policies, AIG said.
The probe relates to the use of the Social Security Administration’s Death Master File to identify deaths of policyholder claims that have not been submitted to the company in the normal course of business.
Besides AIG, MetLife, Nationwide and Prudential have reached agreements with an NAIC task force established to handle the process.
John Hancock reached an agreement with Florida prior to the creation of the NAIC Task Force.
The task force, through outside audit firms, is probing the files of the largest 40 insurance groups, which comprise more than 92.4 percent of the market for life and annuity products nationwide.
And, a recent legal alert by lawyers at Sutherland, Asbill & Brennan now indicate the probe has been expanded to include medium and small insurers.
The states of Florida, California, Illinois, North Dakota, New Hampshire and Pennsylvania are serving as lead states for examinations of the largest insurance companies, although Texas joined the AIG investigation because it is the domiciliary state for some of the AIG companies, McCarty said.
Only California made an estimate as to how much it will gain from the AIG probe.
Under the agreement with unclaimed property officials, AIG will pay an estimated $25 million to $30 million on an estimated 10 million policies that are past due in California, its officials said.