|AIG SUBSIDIARY TO APPEAL NEW JERSEY COMMISSIONERS’ REJECTION OF ADMINISTRATIVE LAW JUDGE RULING ON AUTO INSURANCE RATES|
|NEW YORK, September 7, 2001 - American International Group, Inc. (AIG) subsidiary American International Insurance Company of New Jersey (AIIC), has filed an appeal with the Superior Court of New Jersey, Appellate Division, challenging the August 30 decision by the Commissioner of the New Jersey Department of Banking and Insurance. The Commissioner’s decision ignored an independent party’s finding that confirmed AIIC’s claim that its current automobile insurance rates are clearly deficient and that a significant rate increase is necessary. The company will also file for an emergent hearing to expedite the appeals process.|
This decision by the Commissioner rejects a June 29, 2001 ruling by a New Jersey Administrative Law Judge that validated the need for a rate increase. The Administrative Law Judge’s ruling found in favor of AIIC on eight of ten disputed issues.
Commenting on the Commissioner’s ruling, Robert Sandler, AIG Executive Vice President, said, “The Commissioner has ignored the well-reasoned and considered ruling of the Administrative Law Judge and held, contrary to the facts, that a rate increase is unwarranted. This decision completely contradicts the findings of the only truly independent review of AIIC’s rate filing. In doing so, the Commissioner has demonstrated a complete disregard for the independent review process and is driven purely by political expediency and not by the prescribed duties of the Commissioner’s office.
“In rejecting the Administrative Law Judge’s ruling, the Commissioner stated AIIC could afford to reduce its rates by 4.5 percent However, AIIC’s present rates are already approximately 14.5 percent below its 1995 rates when it filed to enter the New Jersey market. The Commissioner’s suggestion of further rate reductions underscores the overall climate which makes providing auto insurance in New Jersey untenable.
“The Commissioner’s decision supports AIIC’s June 2001 filing to withdraw from the New Jersey automobile insurance market, and puts further focus on the politicization of the State’s regulation of automobile insurance. Ironically, following AIIC’s withdrawal, our policyholders that are able to find coverage will likely have to pay more for their automobile insurance than the increased AIIC rate the Commissioner has rejected. With the withdrawal of AIIC and State Farm, only four of the top ten national writers of automobile insurance will be active in the State. We will be eager to hear the Commissioner explain how a market with fewer companies, less competition and higher rates serves New Jersey’s consumers.”
AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG’s global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. American International Group, Inc.’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.