Giant insurer American International Group has agreed to contribute $200 million in capital and surplus as part of its agreement to take over Golden Eagle Insurance Co.
As part of the deal, AIG would replace Liberty Mutual as the primary reinsurer to Golden Eagle's book of business.''Other than the $200 million in new money, you can't put a price tag on this because the final cost will be based on a sliding scale, with the figure depending on the final amount of assets that Golden Eagle turns over to AIG,'' said Roxani Gillespie, former California insurance commissioner and currently a partner at Buchalter, Nemer, Fields & Younger, the San Francisco law firm representing AIG in California.
Insurance Commissioner Chuck Quackenbush said he was ''pleased with the progress we have made. It paints the brightest possible picture for the employees, claimants, producers and the company's book of business.''
The transaction requires court approval, which could be brought up in court as early as Wednesday.
''We hope there will be a hearing before Judge Cahill within the next 30 to 45 days,'' said Mr. Quackenbush. ''It is important to take care of this matter as soon as possible to safeguard Golden Eagle's policyholders and employees.''
Golden Eagle was found by the insurance department to be deficient in reserves last year, and the company was eventually placed in receivership.
The department asked for bids for Golden Eagle and AIG, Boston-based Liberty Mutual and Underwriters Reinsurance Co. of Woodland Hills, Calif., submitted bids. AIG was named the winning bidder April 6.