AIG (American International Group) has been embroiled in a court case with their life insurance company, Coventry First, since last week. Stating that Coventry has been overcharging them for years, AIG is seeking reparations in the amount of $1.76 billion for damages, and the potential harm visited on the accounts of elderly employees. Accusing Coventry First of not only artificially inflating the prices of nearly 300 accounts but doing so in such a way as to conceal their dealings, AIG is not pulling punches..
In what can only be described as a mafia-esq scheme to hide their business transactions, Coventry First’s blatant and inappropriate use of money they had no right to claim has placed more than a target on their back. Though Coventry claims the policy prices were being manipulated with AIG consent, few can deny the shady and back-alley nature of these deals. investors purchasing these insurance plans on the secondary market need only pay the premiums, and they become the sole beneficiary when the owner of the policy passes on.
Of the nearly 7.000 life settlements purchased from Coventry with a face value of $20 billion, Coventry required an additional $150 million in disguised markups and fees. AIG said it’s entitled to more than $250 million in damages, including interest, based on pretrial rulings that found Coventry liable on certain breach of contract claims. AIG is also looking to have Coventry disclose all collected fees, including legitimate payments for undisputed policies, as well as to impose triple damages under the civil racketeering statute.
It is never wise to play games with other people’s money, and Coventry is now reaping the horrible wind that they’ve sewn. Though the trial continues, the dollar amounts being tossed around in court are staggering, and can make or break whoever comes out the victor.