Liberty Mutual Insurance Co. last Friday asked a federal judge to undo part of a recent settlement by a reinsurance unit of Warren Buffett’s Berkshire Hathaway Inc. with federal investigators, saying it was a victim of fraud.
The reinsurer, General Re Corp., agreed on Jan. 20 to pay $92.2 million to resolve charges that it entered into sham reinsurance contracts with American International Group Inc. and Prudential Financial Inc. that made those insurers’ financial statements look better.
In a filing with the U.S. District Court in Manhattan, Boston-based Liberty Mutual said it deserves $12.1 million that the reinsurer paid to the U.S. Securities and Exchange Commission as part of the settlement.
Liberty Mutual said in a court document it had been unaware when it bought some Prudential property and casualty units in 2003 that those units were involved in what Liberty Mutual called a fraud scheme with General Re.
It said General Re later paid it $29.2 million out of $41.3 million owed under some agreements, but paid the balance to the SEC. Liberty Mutual complained that the regulator rejected its request to put the sum in escrow until a court or arbitration panel could decide who had a right to it.
Saying that General Re “cannot be ordered to pay the same sum twice,” it asked the court to decide whether it has a right to the money, and to amend the settlement as necessary.
An SEC spokesman had yet to review the filing and had no immediate comment.
Prudential settled civil charges in 2008, after the SEC accused it of violating financial reporting provisions.
(Reporting by Jonathan Stempel; editing by Carol Bishopric)
Topics Fraud Reinsurance
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