PNC Bank 2005 Annual Report Download - page 14

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other unaffiliated third parties (other than AIG
Financial Products and its predecessors, successors,
parents, subsidiaries, affiliates and their respective
directors, officers and employees (collectively,
“AIG”)) relating to the subject matter of this lawsuit.
• Insurance Claims . In March 2005, we settled our
claim against one of our insurers under our Executive
Blended Risk insurance coverage related to our
contribution of $90 million to the Restitution Fund.
Under this settlement, the insurer has paid us $11.25
million, but we are obligated to return this amount if
the settlement of the consolidated class action
referred to above does not receive court approval,
does not become effective or becomes unenforceable.
The amount of this settlement will not be recognized
in our income statement until the potential obligation
to return the funds has been eliminated. This
settlement was in addition to settlements with
AISLIC in December 2004 and with another of our
insurers under the Executive Blended Risk policy in
January 2005.
• Other Claims . In connection with the settlement of
the consolidated class action, the claims of IFS on
behalf of our Incentive Savings Plan and its
participants are being resolved and the class covered
by the settlement is being expanded to include
participants in the Plan. The Department of Labor is
not, however, a party to this settlement and thus the
settlement does not necessarily resolve its
investigation.
In addition, the derivative claims asserted by one of
our putative shareholders and any other derivative
demands that may be filed in connection with the
PAGIC transactions are being resolved as a result of
the settlement of the consolidated class action.
• Releases. We are releasing the insurers providing our
Executive Blended Risk insurance coverage from any
further liability to PNC arising out of the events that
gave rise to the consolidated class action, except for
the claims against these insurers (other than those
with whom we have settled) relating to the $90
million payment to the Restitution Fund. In addition,
PNC and AIG are releasing each other with respect to
all claims between us arising out of the PAGIC
transactions.
We will be responsible for the costs of administering the
settlement and the Restitution Fund and may incur additional
costs in the future in connection with the advancement of
expenses and/or indemnification obligations related to the
subject matter of this lawsuit. We do not expect such costs to
be material.
In connection with industry-wide investigations of practices in
the mutual fund industry including market timing, late day
trading, employee trading in mutual funds and other matters,
several of our subsidiaries have received requests for
information and other inquiries from state and federal
governmental and regulatory authorities. These subsidiaries
are fully cooperating in all of these matters.
In addition to the proceedings or other matters described
above, PNC and persons to whom we may have
indemnification obligations, in the normal course of business,
are subject to various other pending and threatened legal
proceedings in which claims for monetary damages and other
relief are asserted. We do not anticipate, at the present time,
that the ultimate aggregate liability, if any, arising out of such
other legal proceedings will have a material adverse effect on
our financial position. However, we cannot now determine
whether or not any claims asserted against us or others to
whom we may have indemnification obligations, whether in
the proceedings or other matters specifically described above
or otherwise, will have a material adverse effect on our results
of operations in any future reporting period.
ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None during the fourth quarter of 2005.