BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
SACRAMENTO, Calif.--An arbitration panel has determined that an American International Group Inc. subsidiary should pay more than $443.5 million to a group of insolvent workers compensation insurers to resolve a reinsurance dispute, according to California Insurance Commissioner Steve Poizner.
The award, which is subject to court approval, would be paid to five companies in the Superior National Insurance Cos. group: Superior National Insurance Co., Superior Pacific Casualty Co., California Compensation Insurance Co., Commercial Compensation Insurance Co. and Combined Benefits Insurance Co.
"These funds will go toward paying the claims of injured workers insured by the insolvent Superior National companies," Mr. Poizner said in a statement announcing the award Friday. "In the future, it will also benefit all California employers, who will pay less in premium surcharges."
The dispute arose over a 1998 reinsurance contract that AIG subsidiary United States Life Insurance Co. wrote for the Superior National companies.
Significant losses on the companies' workers comp business, including business covered by U.S. Life reinsurance, triggered their insolvency. The insurance department seized the companies in March 2000; a court later that year ordered them liquidated.
The year before the companies failed, U.S. Life sought to rescind its coverage. But the reinsurer lost its bid in a 2004 arbitration panel ruling. The panel also ordered U.S. Life to pay the Superior National companies for all of the losses ceded to the reinsurer, plus interest.
The arbitration panel, however, modified the contract and ordered a 10% reduction in the reinsurance coverage.
The reinsurer, however, refused to make payments until the arbitration panel determined how much it owed the insolvent companies.
That amount is $443.5 million, plus interest, the panel has decided. The reinsurer must pay interest at the daily rate of $81,242 on the unpaid balance, compounded yearly, beginning Jan. 1.
U.S. Life also must disgorge all excess investment income earned on the sum it owes Superior National.
In its 2006 10-K form, filed late last week with the U.S. Securities and Exchange Commission, AIG noted: "U.S. Life has filed a petition to vacate all of the arbitration awards from both phases of the arbitration in California federal court. In addition, U.S. Life is pursuing certain insurance recoverables in connection with the contract. As a result of the ruling, AIG increased its reserves by $125 million in the fourth quarter to $478 million. AIG believes that the reserves should be adequate to fund unpaid claims."