AIG seeking $1.76 billion in 'life settlements' trial in New York
By Joseph Ax
NEW YORK (Reuters) - An American International Group Inc (AIG.N: Quote) unit on Thursday asked a federal judge to order a Pennsylvania firm to pay it $1.76 billion in damages for allegedly overcharging for life insurance policies acquired from elderly individuals.
At the outset of a trial in Manhattan federal court, a lawyer for AIG's Lavastone Capital accused Coventry First of artificially inflating the price of about 300 such policies, known as "life settlements," and using a network of subsidiaries to conceal the markups.
"This is a racketeering scheme so audacious it would make the mob blush," Randy Mastro said in his opening statement.
But Heidi Hubbard, a lawyer for Coventry, said AIG had been aware that Coventry was selling certain policies at a gain and never objected.
"There is no fraud if the people handling this business on a day-to-day basis understand and accept the practice that AIG is now challenging," she said.
Investors who acquire the policies on the secondary market pay the premiums and then collect the payout when the individuals die.
Coventry, founded by Philadelphia philanthropist Alan Buerger, is the "leader and creator" of the life settlement industry, according to its website.
AIG bought nearly 7,000 life settlements from Coventry with a total face value of $20 billion. Continued...