Disclosure requirements cause headache for AIG

By Dow Jones Newswires
Posted Dec. 29, 2010 at 4:35 p.m.

American International Group Inc. didn’t report $18.7 billion of policyholder guarantees at two property-casualty subsidiaries in 2008, Bloomberg reported Wednesday, citing a Pennsylvania regulator.

National Union Fire Insurance Co. of Pittsburgh and American Home Assurance Co. had contingent liabilities tied to the promises of $157 billion on Dec. 31, 2008, compared with the $138.3 billion disclosed at the time, Pennsylvania’s acting insurance commissioner Robert Pratter said in a report.

Insurance companies are required to disclose subsidiaries’ guarantees to state regulators, Bloomberg said.

AIG has been told to limit or end its intra-group guarantees, according to the report, and doesn’t face financial penalties, Rosanne Placey, a spokeswoman for the regulator, said in an email.

“We have adopted a remediation plan to ensure that our disclosures are more accurate going forward,” Mark Herr, an AIG spokesman, said in an emailed statement. “We are not required to establish a liability for these guarantees in which the likelihood of payment is remote.”

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