ALBANY, N.Y. (Bloomberg)—New York Attorney General Andrew Cuomo subpoenaed American International Group Inc. as part of a fraud investigation focusing on life insurers' retention of death benefits, said two people briefed on the demands.

Lincoln National Corp., Aetna Inc., Carmel, Indiana-based CNO Financial Group Inc. and Principal Financial Group Inc. also were ordered to turn over records, said one of the people, who declined to be identified because the subpoenas hadn't been publicly disclosed.

Mr. Cuomo is widening a probe after saying on July 29 that he subpoenaed MetLife Inc. and Prudential Financial Inc., the two largest U.S. life insurers. Bloomberg Markets magazine reported July 28 that more than 100 carriers earn investment income on $28 billion owed to life-insurance beneficiaries.

“The substantial interest earned on these accounts mostly benefit and enrich the insurers at the expense of the families to whom the money really belongs,” Mr. Cuomo said in a statement last month. “Beneficiaries are not adequately informed by the insurers of the details of these accounts including the fact that the insurers are making huge profits at the expense of the grieving family.”

Life insurers say the accounts provide beneficiaries access to their funds while giving mourners time to decide what to do with the cash.

“We will assist with Mr. Cuomo's examination, as is our standard practice,” said Mark Herr, a spokesman for New York- based AIG.

‘Complete access'

Principal's clients with so-called retained access accounts are told they have “complete access to those funds,” the Des Moines, Iowa-based insurer said today in a statement. “Our representatives also explain to the beneficiary that they can write a draft for the full amount and deposit it into their own personal bank account at any time.”

Tony Zehnder, a spokesman for CNO, and Lincoln's Laurel O'Brien didn't immediately return messages seeking comment. Fred Laberge of Hartford, Conn.-based Aetna had no immediate comment.

Lincoln has about $800 million in retained-access accounts, company executives said in a July 29 conference call.

“Our planners would in a heartbeat move that money to the right place on behalf of their customers,” CEO Dennis Glass said on the call.

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