NEW YORK — American International Group should pay more than $1.5 billion to rivals to settle a lawsuit alleging the insurer cheated industry-funded pools that cover injured workers, Liberty Mutual Holding Co. said.
The proposed damages are more than triple the $450 million that AIG agreed to in a preliminary settlement advocated by seven insurers, including Travelers Cos. and Ace Ltd. in January. The higher payout is justified because the settlement didn’t account for the full scope of AIG’s underreporting of premiums, Liberty Mutual’s Safeco and Ohio Casualty subsidiaries said in federal court documents filed in Chicago.
The settlement “is detrimental to the class of over 500 insurance companies victimized by AIG’s admitted wrongdoing,’’ Boston-based Liberty Mutual said in an e-mailed statement.
Liberty Mutual’s efforts, if successful, may prolong AIG chief executive Robert Benmosche’s attempts to resolve legal disputes as the Treasury Department prepares to sell its 92 percent stake in the bailed-out company.
