(Bloomberg) — An American International Group Inc. unit and Coventry First LLC began a trial in a dispute over bets in the insurance market on when people would die.
Lavastone Capital LLC, the AIG subsidiary, claims Coventry ripped it off by more than $150 million in a 2006 deal meant to help it acquire life insurance policies from people seeking to sell them for upfront cash.
The trial in Manhattan federal court will hinge on details of the so-called life settlements, in which an investor buys insurance policies from individuals, pays the premiums until they die, and then collects the payout. The arrangement becomes less profitable for the investor the longer the person survives.
The AIG unit said it provided Coventry with secret pricing and underwriting data as part of the deal, paying more than $1 billion in fees. In return, Coventry was obligated to convey to Lavastone at cost the life policies it bought.