Beginning March 29: To help insurance agents and financial advisors like you guide clients in making critical wealth, health and life decisions we will be moving our coverage from to

Our comprehensive coverage will help you expand your knowledge base and adapt a new client-centric approach that incorporates both insurance and investment solutions.

ThinkAdvisor’s new Life/Health channel is your roadmap to thriving in a disrupted environment.


Filed Under:Your Practice, Regulatory

Talks on ALICO problems underway

Settlement talks are underway between New York state regulators and prosecutors and American International Group and MetLife over allegations that two former AIG insurance units based in Delaware have operated in New York since 2007 without a license. AIG sold the company to MetLife in 2010.

Additionally, the two companies say in securities filings, the New York attorney general is probing whether the two insurance companies, American Life Insurance Company (ALICO) and Delaware American Life Insurance Company (DelAm) paid New York premium and franchise taxes during that period.

The two companies, while based in Delaware, do business mostly overseas. They sell life, health and accident policies throughout the world, and are a dominant insurer in Japan. They also sell in Europe, Central and Eastern Europe, the Middle East and Latin America.

The New York authorities' inquiries involve sales of benefits to multinational companies for employees in different countries, officials said.

The talks are being led by Benjamin Lawsky, superintendent of the New York Department of Financial Services, and Manhattan District Attorney Cyrus Vance Jr.

A spokesman for the New York DFS declined comment, as did officials from AIG and MetLife.

According to certain news organizations, New York state regulators are seeking $100 million from the two companies to settle the allegations.

AIG’s third quarter securities filing indicated that the New York state inquiries relate to "whether ALICO, DelAm and their representatives conducted insurance business in New York over an extended period of time without a license, and whether certain representations by ALICO concerning its activities in New York were accurate.”

MetLife filings contain similar language.

Under the sale agreement, AIG indemnified MetLife for costs associated with legal action dealing with “specific product, investment, litigation and other matters that are excluded from the general representations and warranties indemnity” undertaken against the two companies after it was sold to MetLife but limited to the period when AIG owned the company.

MetLife paid AIG $16 billion for the company. A certain amount was retained in escrow related to any litigation or regulatory probes related to ALICO and DelAm for which AIG would be held liable.

However, according to the AIG securities filing, “In connection with the indemnity obligations described above, approximately $20 million of proceeds from the sale of ALICO remained in escrow as of September 30, 2013.” 

AIG sold ALICO and DelAm to MetLife in 2010 as part of its reorganization plan following its takeover by the federal government in September 2008. Initially, the Board of Governors of the Federal Reserve Board advanced AIG $85 billion in return for 79.9 percent of its stock Sept. 16, 2008, after AIG became unable to meet margin calls on credit default swaps issued by its Financial Products subsidiary.

The Treasury Department later reimbursed the Fed for its investment and AIG and completed its divestiture of all of its stock in 2012.

Featured Video

Most Recent Videos

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Protesters Disrupt WellPoint Annual Meeting


Hecklers call for more disclosures of information about political contributions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.