Risk & Insurance Online

AIG EXECS SCRUTINIZED

Authorities are investigating at least three present and former American International Group Inc. employees in connection with the firm's derivatives contracts, according to reports in the Wall Street Journal.

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Authorities at the Department of Justice and the Securities and Exchange Commission are examining the actions of Joseph Cassano, who headed AIG's London-based financial products group; another London executive, Andrew Forster; and Tom Athan, who is based in Wilton, Conn. None of the individuals has been charged.

Cassano resigned from AIG last year, but Forster and Athan are still employed by the company and are among those who received controversial retention bonuses.

The newspaper said that, according to its sources, the investigators are looking at ways the executives may have misled auditors and investors about the value of derivatives the firm sold.

OFFSET PROVISION OFFED

A state law's "offset provision" that reduces workers' comp benefits for Social Security recipients over the age of 65 is unconstitutional, Utah's Supreme Court ruled.

The high court said the statute--which reduces workers' comp benefits by 50 percent after 6 years--is unconstitutional because it singles out people over age 65.

The decision in Nathan H. Merrill vs. Utah Labor Commission and Vermax of Florida Inc. reverses a lower court finding that lawmakers acted properly when they passed the law to reduce employers' workers' comp costs while ensuring injured employees adequate wage recovery, court records state.

Merrill, who suffered a back injury while working for Vermax when he was 64, had been found by the Utah Labor Commission to be permanently and totally disabled. The commission ordered that he receive $395 a week. His employer challenged the award, arguing it should be offset.

REINSURERS' PROFITS UP

PartnerRe Ltd. said its profits grew 9.7 percent to $141.5 million in the first quarter of 2009.

The Bermuda-based insurer and reinsurer recorded net investment losses of $70.1 million during the first quarter of 2009, compared with a $25.1 million gain in the same period last year.

However, those losses were partially offset by a $57 million gain resulting from the purchase of 75 percent of its outstanding debt securities.

Montpelier Re Holdings Ltd. in April also reported profits grew to $52.3 million during the first quarter of 2009, up from $300,000 for the same period in 2008. Net premiums written for the quarter were $237.8 million, up 7.5 percent over the prior-year period.

PROFITS TANK AT XL

First-quarter 2009 net income at XL Capital Ltd. plummeted to $3.1 million from $244.4 million in the comparable period last year, the Bermuda-based insurer reported. Net realized losses nearly doubled and net premiums written fell by nearly a third, XL also reported.

XL reported $251.9 million in net losses on investments for the quarter, vs. $102.3 million in losses for the comparable quarter a year ago.

--Compiled by staff from news and wire reports.

June 1, 2009

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