Spitzer May File Civil Complaint Against AIG

New York Atty. Gen. Eliot Spitzer and the state Insurance Department are expected to file a civil complaint against insurer American International Group Inc. as early as this week, a state official familiar with the investigation said Wednesday.

State and federal regulators are investigating whether AIG, the nation’s largest insurance company, duped its own investors and regulators by inflating its financial reserves and underreporting losses, according to the official, who spoke on the condition of anonymity.

AIG spokesman Joe Norton declined to comment Wednesday about the anticipated civil action, which was reported in Wednesday’s editions of the Wall Street Journal.

Last week, the newspaper quoted unnamed sources saying Spitzer had a grand jury probing potentially criminal conduct by individuals at AIG, including former top management.

Spitzer and state Insurance Department Supt. Howard Mills declined to comment Wednesday about AIG. But Spitzer said probes by his office and federal and other states’ officials were crucial to consumers of auto, home and other lines of insurance.

“Every one of those lines of insurance have been affected by the unfortunate rampant fraud we have found in the insurance sector both on the brokerage side and on the carrier side,” Spitzer said Wednesday.

“The insurance industry, which is so central to so much of what we do, needs to ask itself some very tough questions on whether it has been living up to its obligations to the public,” he said.

In the last year Spitzer’s insurance investigation has led to 10 guilty pleas and an agreement by companies to provide $1 billion in restitution, including $850 million in restitution to be paid by Marsh & McLennan Cos. to its clients over four years.