Policyholders Beware: AIG-NICO Deal Requires Caution

American International Group, Inc. ("AIG") recently announced that it entered into a significant reinsurance agreement with a subsidiary of Berkshire Hathaway Inc. ("Berkshire"). Reportedly, that agreement "covers 80% of substantially all of AIG's U.S. Commercial long-tail exposures for accident years 2015 and prior." While AIG states that it "will retain sole authority to handle and resolve claims," the details of the arrangement, by which the Berkshire subsidiary "has various access, association and consultation rights," remain far from clear. The involvement of the Berkshire subsidiary and any other related Berkshire entities, which have routinely put their economic interests ahead of their insureds', should give policyholders pause. Policyholders should remain vigilant and cautious.