Insurer settles bid-rigging case for $115M

The Hartford Financial Services Group Inc. said it has reached a $115 million settlement with three states to resolve a bid rigging and market timing case. The Hartford, Conn.-based insurer said yesterday that it settled with New York Attorney General Andrew Cuomo in an investigation of market timing within the company's variable annuity products. The company also settled with the Connecticut and Illinois Attorneys General, resolving their investigations of the compensation arrangements between the Hartford and its property-casualty agents and brokers. The insurer was also accused of allowing certain individuals to make rapid trades in and out of mutual funds. The Hartford said that the settlement will be funded by an $83 million reserve that was previously set aside. Hartford's penalties include $26 million in fines, with New York, Connecticut and Illinois receiving $20 million, $3 million and $3 million, respectively. The company will also pay $89 million in restitution, with $84 million going to victims of market timing and $5 million to victims of broker compensation. The company agreed to the settlement without admitting or denying any violation of state or federal law and the Securities and Exchange Commission has concluded its investigation without recommending any enforcement action. Hartford also issued an apology and agreed to enact significant business reforms.