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State launches investigation of AIG statements

By JEFF HARRINGTON
Published May 19, 2005

More than three months after federal regulators and other states began probing questionable deals inside American International Group Inc., Florida is weighing in.

At stake: AIG could lose its state license or be compelled to fire anyone associated with the company's recent admission of filing false financial statements.

Florida's Office of Insurance Regulation said Wednesday that it has issued orders to 43 licensed companies associated with the insurance giant to turn over all information regarding the false financial statements.

The office of Florida Insurance Commissioner Kevin McCarty said in a statement that the financial community has been "rocked with the results of investigations" by the Securities and Exchange Commission and other regulators.

AIG's woes began in February when both New York Attorney General Eliot Spitzer and the SEC issued subpoenas to examine certain reinsurance transactions and nontraditional insurance products handled by the company.

The subpoenas came just three months after AIG had agreed to pay $126-million to settle federal allegations that it helped two customer companies commit accounting fraud.

In March, AIG acknowledged it had improperly booked transactions with a unit of Berkshire Hathaway Inc. that artificially boosted its reserves. Other states, including Indiana, have since launched investigations.

Florida's probe was triggered by a more recent development. On May 1, AIG admitted there were errors in its financial statements dating back to 2000, saying it would restate most of those filings.

Florida regulators said AIG's admissions appear to indicate violations of both federal and state laws.

AIG employees "intentionally manipulated" financial information to make their company look better, said Dennis Threadgill, of McCarty's office. "That's a crime in Florida. All of which is grounds to suspend their license."

McCarty's office gave AIG-related companies until July 1 to file "true and correct" financial statements for the years 2000 to 2005. The AIG companies also have to report on the extent of misrepresentations "and identify and remove any parties culpable in this matter."

AIG spokesman Joe Norton said the company would give Florida the information it seeks.

"As we have said previously," Norton said, "we are committed to cooperating with all regulators and governmental authorities in addressing their concerns."

Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.

[Last modified May 19, 2005, 00:43:18]