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State receives premium taxes from AIG settlement

JACKSON — The Mississippi Insurance Department has transferred $332,676 to the Mississippi Department of Revenue from premium taxes recently recovered during the settlement of a multi-state probe into American International Group’s (AIG’s) workers’ compensation insurance affiliates.

The state of Mississippi received just under $1 million from the settlement earlier this spring.

The monies are a result of a 2010 settlement agreement in a multi-state market conduct examination of AIG for its writing and financial reporting practices regarding workers’ compensation insurance that began in 2005. This settlement is not involved or associated with AIG’s 2009 financial difficulties. The agreement was finalized May 29, and was a cooperative effort between state commissioners who are members of the National Association of Insurance Commissioners.

AIG will have paid a total of $100 million in penalties, as well as $46.5 million in additional premium taxes and assessments to all 50 states and the District of Columbia prior to the end of this month.

AIG was found to have operated in a pooled arrangement and underestimated their liabilities under inter-company policyholder guarantees. Through this agreement they have corrected previous financial reports and reallocated approximately $2.1 billion of premium to workers’ compensation.

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