AIG may have lost a bit of its swagger - that's what happens when your stock tanks and the government has to bail you out to the tune of $150 billion, give or take a few billion. But tough guys don't dance, they fight back. AIG is suing NCCI and a host of major workers comp carriers (Travelers, The Hartford, Liberty Mutual, etc.) for under-reporting comp premiums and conspiring to harm AIG. That's right. All those bullies have been picking on AIG.
AIG's lawsuit is in direct response to an eerily similar suit filed by NCCI against AIG, accusing the staggering behemoth of under-reporting its share of premiums in nationwide assigned risk pools. This suit, filed in U. S. District Court, was dismissed by Judge Robert Gettlemen, who found that NCCI lacked legal standing to file it. The fallen banner has been quickly retrieved by Liberty Mutual, among others, who intend to refile the complaint. After all, it is AIG's direct competitors who would have been harmed if, indeed, AIG under-reported premiums.
Badda Bing, Badda Boom
Which leads us to the not-so-lovely, two-can-tango result of AIG counter-suing, alleging a conspiracy to shift costs to AIG. "AIG's complaint asserts that a number of its competitors under-reported their workers compensation premiums over many years and formed an illegal conspiracy to conceal that fact and to harm AIG," said company spokesman Mark Herr.
It's a shame that this colorful gang war has to play out in sedate courtrooms, with immaculately dressed lawyers mouthing lines better suited for Brando, Pacino and Cagney. After all, these are suits filed under anti-racketeering laws. It's doubtful that the original crafters of the RICO legislation had insurance giants in mind when they fashioned this weapon to attack organized crime.
AIG stock is trading near $46, which sounds pretty good when compared to the under-a-dollar price of just a few weeks back. But appearances can be deceptive. To avoid the humiliation of trading as a penny stock, AIG did a reverse 20 for 1, carving each share into 20 pieces. For long-term shareholders, that $46 is really just two bucks and change. (Go ahead, shareholders, celebrate with a bottle of two buck chuck!)
"You gotta problem with that?" No, sir, no problem at all. I'm just walking down the street with my hands in my pockets, minding my own business. I'm not looking for trouble. What you folks do with all those premium dollars, all that TARP money, all those securitized loans, that's your business. I wish you the best, I really do. And by the way, that's a swell suit you're wearing. A really nice fit. Would you mind my asking how much it cost...?