Am. Int'l Grp. v. Liberty Mut. Ins. Co, No. 12-1753 (7th Cir. 2013)
Annotate this CaseCompanies underwriting workers’ compensation insurance participate in a reinsurance pool administered by the National Workers Compensation Reinsurance Association. Insurers share in the pool’s profit or loss according to the volume of business they underwrite. When the pool is profitable, it is beneficial to have a larger book of business; when the pool loses money, a smaller book means that the underwriter needs to contribute less toward the losses. The class contends that AIG underreported the size of its business in losing years, causing the pool’s other members to bear a disproportionate share of the losses and sought$3.1 billion. Some of the insurers had independent claims against AIG. AIG advanced its own claims against Liberty Mutual. The district judge approved a settlement. Liberty Mutual appealed, arguing that its share would not compensate it adequately for its stand-alone claims against AIG and that the conflicts of interest within the reinsurance pool meant that the case never should have been certified as a class. After argument, Liberty Mutual settled with AIG. The Seventh Circuit dismissed the appeal, holding that the settlement does not jeopardize the interests of the unrepresented class members.
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