AIG severs ties with C.V. Starr; expands global energy unit, forms new unit

March 6, 2006

American International Group Inc. announced that its AIG Companies terminated the agency relationship with Starr Technical Risks Agency Inc. and its subsidiaries (Starr Tech), insurance agencies owned by C.V. Starr & Co. Inc.

C.V. Starr is run by AIG’s own former chairman and CEO, Maurice “Hank” Greenberg. The parties have been in a court dispute over Starr’s attempts to move its AIG business to other carriers.

According to AIG’s announcement, all current and future underwriting, claims, loss control and administrative functions relating to accounts formerly underwritten by Starr Tech on behalf of the AIG Companies will be managed by New York-based AIG Global Energy, which already provides insurance and risk management programs to energy and energy-related companies worldwide.

AIG Global Energy has expanded its scope of operations by creating a new division, AIG Global Energy-North America, to serve the worldwide property insurance needs of insurance customers in North America.

Starr Technical is a managing general agency that specializes in oil and chemical industry insurance.

The AIG Companies also announced that it has formed AIG Specialty Excess, an umbrella and excess casualty underwriting unit that the company says will concentrate on insuring specialty and difficult-to-place classes of business including construction, transportation, public entities and educational institutions.

Effective May 15, 2006, AIG Specialty Excess will respond to all in-force business, as well as new and renewal business currently handled by the C.V. Starr & Co. agency, a subsidiary of C.V.Starr & Co. Inc.

Last month, a New York judge granted American International Group a restraining order against Greenberg and Starr Technical Risk Agency, that bars Starr from placing its AIG business with other insurers.

The order barred Greenberg’s agency from pursuing contracts with National Indemnity, a Berkshire Hathaway unit, for business currently with AIG.

AIG has claimed that Starr Technical has been using “unauthorized” reinsurance agreements with National Indemnity to take business now placed with AIG and give it to other insurers. AIG maintains that Starr Technical and AIG have had an exclusive contract since 1992, which includes allowing Starr Technical to sell policies in AIG’s name.

C.V. Starr has countersued charging that AIG is trying to keep its agency from competing. Its lawyers have accused AIG of trying to close down Starr agencies and urging clients not to do business with Greenberg’s companies.

Topics Excess Surplus AIG

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Insurance Journal Magazine March 6, 2006
March 6, 2006
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