KPMG Settles AmGen Suit; Agrees to Pay $18 Million
Without admitting fault, KPMG LLP settled a suit connected to the collapse of General American Life Insurance Co., formerly Missouri's largest insurance company, the St. Louis Business Journal reported.
In a settlement approved Sept. 21 by Judge Thomas Brown of the Cole County (Missouri) Circuit Court, KPMG will pay $18 million to a General American liquidation fund, attorneys in the case told the Business Journal.
The settlement also releases several KPMG partners who were named in the suit from further litigation. The suit was brought by Scott Lakin, director of the Missouri Department of Insurance, and Albert Riederer, special deputy liquidator for General American Mutual Holding Co., against KPMG and six of its partners in 2002, alleging they breached their professional obligations to General American, the Business Journal reported.
The suit claimed that more than $1 billion was lost, and the Business Journal reported that the General American liquidation fund has collected $47.5 million so far, most of which will eventually go to the 300,000 St. Louis-area policyholders. Liquidators have already distributed more than $1 billion of the $1.2 billion collected from the sale of General American to Metropolitan Life more than four years ago, the Business Journal reported.
Tom Fitzgerald, a KPMG spokesman, told the Business Journal that the firm decided to settle so it could focus on its audit business. "KPMG is confident that the audit services we provided to General American were consistent with professional standards and industry practices."