AIG 2012 Annual Report Download - page 315

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more broad conspiracies to allocate customers, steer business, and rig bids. These actions, including 24 complaints
filed in different federal courts naming AIG or an AIG subsidiary as a defendant, were consolidated by the judicial
panel on multi-district litigation and transferred to the United States District Court for the District of New Jersey
(District of New Jersey) for coordinated pretrial proceedings. The consolidated actions have proceeded in that Court
in two parallel actions, In re Insurance Brokerage Antitrust Litigation (the Commercial Complaint) and In re Employee
Benefits Insurance Brokerage Antitrust Litigation (the Employee Benefits Complaint, and, together with the
Commercial Complaint, the Multi-District Litigation).
The plaintiffs in the Commercial Complaint are a group of corporations, individuals and public entities that contracted
with the broker defendants for the provision of insurance brokerage services for a variety of insurance needs. The
broker defendants are alleged to have placed insurance coverage on the plaintiffs’ behalf with a number of insurance
companies named as defendants, including AIG subsidiaries. The Commercial Complaint also named various brokers
and other insurers as defendants (three of which have since settled). The Commercial Complaint alleges that
defendants engaged in a number of overlapping ‘‘broker-centered’’ conspiracies to allocate customers through the
payment of contingent commissions to brokers and through purported ‘‘bid-rigging’’ practices. It also alleges that the
insurer and broker defendants participated in a ‘‘global’’ conspiracy not to disclose to policyholders the payment of
contingent commissions. Plaintiffs assert that the defendants violated the Sherman Antitrust Act, RICO, and the
antitrust laws of 48 states and the District of Columbia, and are liable under common law breach of fiduciary duty
and unjust enrichment theories. Plaintiffs seek treble damages plus interest and attorneys’ fees as a result of the
alleged RICO and Sherman Antitrust Act violations.
The plaintiffs in the Employee Benefits Complaint are a group of individual employees and corporate and municipal
employers alleging claims on behalf of two separate nationwide purported classes: an employee class and an
employer class that acquired insurance products from the defendants from January 1, 1998 to December 31, 2004.
The Employee Benefits Complaint names AIG as well as various other brokers and insurers, as defendants. The
activities alleged in the Employee Benefits Complaint, with certain exceptions, track the allegations of customer
allocation through steering and bid-rigging made in the Commercial Complaint.
On August 16, 2010, the United States Court of Appeals for the Third Circuit (the Third Circuit) affirmed the dismissal
of the Employee Benefits Complaint in its entirety, affirmed in part and vacated in part the District Court’s dismissal
of the Commercial Complaint, and remanded the case for further proceedings consistent with the opinion. On
March 30, 2012, the District Court granted final approval of a settlement between AIG and certain other defendants
on the one hand, and class plaintiffs on the other, which settled the claims asserted against those defendants in the
Commercial Complaint. Pursuant to the settlement, AIG will pay approximately $7 million of a total aggregate
settlement amount of approximately $37 million. On April 27, 2012, notices of appeal of the District Court order
granting final approval were filed in the Third Circuit. As of December 5, 2012, the Third Circuit had dismissed all
appeals from the District Court order granting final approval of the settlement. On January 16, 2013, class plaintiffs
filed a motion in the District Court seeking an order authorizing distribution of the settlement fund.
A number of complaints making allegations similar to those in the Multi-District Litigation have been filed against AIG
and other defendants in state and federal courts around the country. The defendants have thus far been successful
in having the federal actions transferred to the District of New Jersey and consolidated into the Multi-District
Litigation. Two consolidated actions naming AIG defendants are still pending in the District of New Jersey. In the
consolidated action The Heritage Corp. of South Florida v. National Union Fire Ins. Co. (Heritage), an individual
plaintiff alleges damages ‘‘in excess of $75,000.’’ Because discovery has not been completed and a precise amount
of damages has not been specified, AIG is unable to reasonably estimate the possible loss or range of losses, if any,
arising from the Heritage litigation. As of February 21, 2013, the plaintiff in Avery Dennison Corp. v. Marsh &
McLennan Companies, Inc. (Avery), the other remaining consolidated action has not formally specified an amount of
alleged damages. AIG is therefore unable to reasonably estimate the possible loss or range of losses, if any, arising
from this matter.
Finally, the AIG defendants have settled the four state court actions filed in Florida, New Jersey, Texas, and Kansas
state courts, where plaintiffs had made similar allegations as those asserted in the Multi-District Litigation.
On May 24, 2007, the National Council on Compensation
Insurance (NCCI), on behalf of the participating members of the National Workers’ Compensation Reinsurance Pool
(the NWCRP), filed a lawsuit in the United States District Court for the Northern District of Illinois (the Northern
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AIG 2012 Form 10-K298
Workers’ Compensation Premium Reporting.
ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES