What’s new: In brief (December 02, 2004)

AIG has been served with a lawsuit alleging violations of U.S. pension plan legislation for the devaluation of the company’s stock as a result of the recent broker compensation scandals. New York law firm Wolf Popper LLP has filed the suit on behalf of participants in AIG’s 401k plan, alleging the insurer “failed to disclose certain improper business practices” and “touted itself as experiencing strong, sustainable growth”. The suit alleges the company inflated its revenue and income because it is now exposed to massive penalties and/or fines as a result of its potential involvement in broker compensation activities which have drawn the scrutiny of authorities. To date, AIG has not been served notice that it is being charged by any authorities in connection with broker compensation or alleged big-rigging activities, although two employees have pled guilty to bid-rigging activities allegedly involving broker Marsh. While AIG shares dipped below US$55 following announcement of the guilty pleas, they have since rebounded and closed Thursday just above US$65.

A.M. Best has placed the ratings of St. Paul Guarantee Insurance Co. and Travelers Casualty and Surety Co. of Canada under review with developing implications pending their imminent amalgamation. Currently St. Paul Guarantee carries an “A” rating, while Travelers is at “A+”. The companies will, subject to regulatory approval, be merged in St. Paul Guarantee Insurance Co. concurrent with the merger of their U.S.-based parent companies.

RS Group of Companies announces Patrick Driscoll has been named division president for its RentShield offering. Driscoll brings more than 25 years experience to the role, including work with CNA, Zurich and Balboa Insurance. He will work with brokerage Aon to introduce RentShield to the North American market.