UNDER CONSTRUCTION! This site is a few years out of date but feel free to have a look around anyway. I'll be updating in due course. Thanks. Dean, October 2019

AIG's Other Reputation

AIG's Other Reputation

When his pickup truck developed engine trouble a few years ago, Anthony A. Stankus filed a claim under an auto warranty he had bought from a unit of insurance giant American International Group Inc.

Soon the Phoenix consultant got his answer: Claim denied.

Most policyholders would have left it at that. But Stankus sued -- and won a rare look at the internal claims-handling practices at the world's largest insurance company.

As it turns out, AIG was losing more than $210 million on auto-warranty claims, provoking the ire of the company's longtime chairman and chief executive, Maurice R. "Hank" Greenberg, according to court documents. As a result, in mid-1999, a newly installed team at AIG 's auto-warranty division began to reject thousands of claims -- including half of the claims that its own contractor, a claims-handling company, recommended be paid, according to court papers. Stankus 's claim was among them.

Any modification to a car could be used as a reason to reject, Richard John Jr., a former senior vice president of the claims-handling company, Mechanical Breakdown Administrators Inc. of Scottsdale , Ariz., testified -- even installing manufacturer-approved new tires or, in Stankus 's case, a trailer hitch. When John protested, he said an AIG official told him, " 'We are losing X number of million dollars a year on these programs, and we've got to do something.' "

AIG has declined to discuss individual lawsuits. But Charles R. Schader, AIG's senior vice president for claims, said the company never denies claims to boost profitability. He said that -- allowing for an occasional mistake -- AIG pays legitimate claims promptly and gets few complaints.

"If we didn't pay claims, including the large ones, we'd be out of business," Schader said.

These days AIG is on the defensive ....

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Loss of Coordination

Loss of Coordination

New York Attorney General Eliot L. Spitzer and federal officials have stopped cooperating with each other in parallel probes of the U.S. insurance industry, and each has made separate deals with witnesses that render the witnesses less useful to the other side, according to people familiar with the case and legal experts.

State and federal officials jointly interviewed insurance executive witnesses until late April or early May, but since then cooperation has stopped, and they now conduct interviews separately, said sources familiar with the case. The sources spoke only on the condition of anonymity because of the continuing investigation.

At one point, a scheduled joint interview was canceled after federal officials learned that Spitzer staffers already had met separately with the witness's lawyer and discussed a deal, one of the people familiar with the matter said....

Hoping to Avoid The Third Out

Hoping to Avoid The Third Out

...As part of his duties, Evan oversaw AIG's auto warranty business, which turned into a "disastrous" investment resulting in a $210 million loss by 1999, according to a civil fraud suit filed by Spitzer against AIG last month. In lengthy litigation brought in 1999 against AIG by a claims adjuster, Warrantech Automotive of Bedford, Tex., Evan Greenberg testified in a 2001 deposition that his father held him responsible for the debacle.

"I received the CEO's displeasure with the business, and how bad it was, routinely; his impatience, his unhappiness and his expectations," he said. The case was first highlighted in a USA Today article published in November. In September 2000, Evan left.

"We wish Evan the very best in his future endeavors," his father said in AIG news release....

A Proxy Adviser's Two Sides

A Proxy Adviser's Two Sides

The questions center on ISS's growing business of selling services to the same corporations it scrutinizes. For example, ISS ranks corporations according to how well they score on its corporate-governance test. But it also sells services that corporations use to improve those scores.

"If your governance is not getting a good grade, you go see them and they tell you how to get a good grade," said Ira M. Millstein, a securities lawyer and partner at New York's Weil, Gotshal & Manges LLP. "If that's not a conflict, I don't know what is."

In 2004, the head of Missouri's $8 billion public pension fund dropped ISS over concerns about corporate consulting fees, according to a series of letters exchanged in 2004 and obtained by The Washington Post. In the letters, Gary Findlay, executive director of the Missouri State Employees' Retirement System, said ISS couldn't provide enough assurance that its loyalty was solely with shareholders.

"I see no merit in further wasting your time or mine regarding this issue," Findlay wrote. "From this point forward, we will . . . engage an organization that at least has the appearance of undivided loyalty to . . . clients...."