Hearing focuses on loss in insurance scheme (There's other insurance news as well!)

[burythehatchet]

HARTFORD, Conn._Five insurance executives convicted of a scheme to manipulate the financial statements of the world's largest insurance company were back in court Thursday as a judge tries to put a price tag on their crimes.

...

The four former executives of General Re Corp. and a former executive of American International Group were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

Prosecutors said the defendants participated in a scheme in which AIG paid Gen Re as part of a secret side agreement to take out reinsurance policies with AIG in 2000 and 2001, propping up its stock price and inflating reserves.

What's interesting about the last part is that inflating reserves on the insurance companies balance sheet has the effect of showing the company to be less profitable than it actually is. That, of course translates to higher premiums for their policyholders.

I would not accuse every AIG business unit of engaging in this fraud, but I also would think that there are other cases out there that haven't been uncovered. When they shut Eliot Spitzer down they got out of jail for free.


http://fpn.advisen.com/fpnHomepagep.shtml?resource_id=83360811928166578#top

[Draill]

1. Kick. n/t

[burythehatchet]

2. thanks

[Draill]

3. No problem, glad you got the 5th rec. n/t.