AIG’s Lavastone settles life settlements lawsuit against Coventry First

Earlier this year, a division of American International Group agreed to settle a $2 billion lawsuit filed against a leading provider of life settlement investments. The lawsuit, filed by AIG’s Lavastone Capital LLC, alleged that actions by the Philadelphia-based Coventry First LLC caused Lavastone to pay about $160 million in hidden fees on life settlements purchased from Coventry over a 10 year period.

Lavastone’s lawsuit against Coventry involved the purchase of about 7,000 life settlements, valued at around $20 billion, between 2001 and 2011. Life settlement investments involve life insurance policies which are sold by the policy holder to an investor in exchange for a lump-sum payment. The purchaser of the policy is entitled to receive the proceeds, or “death benefit”, from the insurance policy when the insured individual dies.

According to the lawsuit filed by Lavastone in September 2014, hidden markups and other fees imposed by Coventry caused about $160 million in markups and fees to be added to the policies. Lavastone alleged that Coventry increased these practices following the financial meltdown in 2008, when AIG was receiving a bailout from the federal government.

AIG filed a lawsuit against Coventry in the U.S. District Court for the Southern District of New York, asking for $2.02 billion in damages. The investment company requested the return of all the unwarranted fees it was forced to pay by Coventry, as well as triple damages to which it alleged it was entitled under civil racketeering statutes.

Coventry and Lavastone were awaiting a ruling from Judge Jed Rakoff, who heard the non-jury trial, when the settlement agreement was reached. Under the terms of the deal, Lavastone will be able to sell any of the life settlement investments that it acquired during its dealings with Coventry. The AIG division will also be allowed to transfer its servicing of the life settlements sold by Coventry to another company.

Heygood, Orr & Pearson and Life Settlement Investments Litigation

If you or your company has been harmed financially as a result of wrongful actions involving life settlements, you may qualify to take legal action and attempt to recover your losses in court. The first step in filing a case is to talk with a law firm whose attorneys have the knowledge and experience with life settlement lawsuits to handle your case from beginning to end during the litigation process.

The lawyers at Heygood, Orr & Pearson have represented corporations and private individuals in numerous lawsuits involving life settlements. Some of these lawsuits involved insurance companies that claimed that valid life settlement investments were “STOLI policies” and refused to pay the death benefit on a valid claim.

Our law firm has also handled cases involving life settlement investors who were misled about the value of their investments by life settlements companies. In other cases, we have represented clients who were charged too much for their investments based on bogus life expectancy estimates for the insurance policy involve in the life settlement agreement. Heygood, Orr & Pearson has also filed lawsuits on behalf of life settlements brokers.

For a free legal consultation about filing a life settlement lawsuit, contact the lawyers at Heygood, Orr & Pearson by calling our toll-free hotline at 1-877-446-9001. You can also reach us by following the link to our free case evaluation form and answering a few simple questions about your situation to get started.

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