American International Group Inc. claimed that it had reached a decision to settle its $2 billion litigation. It will allegedly resolve the accusations of Coventry First that the Philadelphia area firm overcharged the life insurance policies acquired from elderly people.
According to The Wall Street Journal, life settlements are guidelines typically sold by the ill or elderly people to investors. The reason behind it is that these people cannot afford or no longer need the life insurance. Investors then hope that the future death benefit will go beyond the amount spent to purchase the policy and premiums they will need to pay while waiting for the person to die. It has even referred to as "death bets" by some critics.
The life settlement could make AIG sell the portfolio, which AIG estimated as $3.6 billion of the end of last year. The life settlements are among quite a few of the "nonstrategic assets" that the AIG recognized as for sale in the strategy update made on January 26. The AIG is asking to give back the $25 billion in capital to shareholders throughout the next year.
Reuters reported that the agreement between AIG's Lavastone Capital LLC unit and Coventry First LLC took part, as both of the companies awaited the decision from the U.S. District Judge Jed Rakoff in Manhattan after the non-jury trial concluded in October. As part of the settlement between both parties, Lavastone will reportedly be able to move Coventry's servicing of AIG's life settlements portfolio to another party. The deal would also permit AIG's unit to freely sell the policies that originally came from Coventry.
AIG's Lavastone bought almost 7,000 life settlements from Coventry, garnering the value of $20 billion from 2001 to 2011, when AIG discontinued acquiring life settlements. Lavastone filed its litigation two years ago, as reported by CNBC.
The Fort Washington, Pennsylvania- based firm's move caused it to pay around $160 million for hidden mark-ups and fee overcharges. The accused scheme increased during the financial crisis in 2008. During that period, AIG was receiving government bailouts to cope up with its downfall, and then AIG argued with Coventry at the trial.
Meanwhile, AIG during the trial sought for $2.02 billion for damages based on its demands that Coventry wards off all of the fees it collected and its request for Rakoff to compel triple charges under the civil racketeering law. But then the agreement still remains on confidential terms, but this assures that the court case between AIG and Coventry First has already ended.
© 2023 Lawyer Herald All rights reserved. Do not reproduce without permission.
Get the Most Popular Lawyerherald Stories in a Weekly Newsletter
Join the Discussion
Related Articles
