According to a statement by the Insurance Department in Pennsylvania on Wednesday, around $100 million in penalties will be paid by the American International Group due to mistakes in the information for the insurance of the compensation of employees.
Aside from the penalties, taxes worth $46.5 million will be paid by AIG, which will face another $150 million in penalties if it fails to comply with the compliance program. The main violation was reporting over $2 billion as premiums for commercial or general auto liability instead of employee compensation.
Mark Herr of AIG said, transactions from 1975 to 1996 were the main focus of the investigation. Another settlement in 2006 with the state of New York focused on the same time interval. He added that AIG was satisfied with the arrangement since it settles all regulatory concerns in relation to the premiums for the compensation of the employees.
AIG had an arrangement with New York State and Federal authorities in 2006 for a number of issues which included the premium for employee compensation. Over $1 billion was paid by AIG for the settlement.
The latest investigation involved seven other states while the 35 other states have to approve the settlement by the March 1before it will be finalized.
Once the settlement is finalized AIG will take out a major hitch while continuing its reform program, a recapitalization agreement will be finalized on March 15 which will repay the New York Federal Reserve Bank and giving over 90 percent ownership of AIG to the US Treasury.
The AIG bailout reached $180 billion but the government is set to profit by the billions for salvaging the largest insurance company in the world. Shares of AIG closed 2.56 percent or $1.43 lower on December 23 at $54.33.
Source : Planet Insane
