Nineteen insurance companies have filed suit against AmericanInternational Group, Inc. alleging fraudulent inflation ofreinsurance claims.

John Hancock, Boston; First Allmerica, Worcester, Mass.; andAmerican Reinsurance Company, Princeton, N.J., are among thecompanies bringing the action.

The suit alleges that the New York-based AIG filed $73 millionin "grossly inflated" claims against the 19 reinsuranceentities.

AIG spokesman Joe Norton said that the company denies "allallegations of wrongdoing including the allegations of fraud."

"This is a reinsurance collection dispute that would normally beresolved in a private arbitration between the parties," Mr. Nortonsaid. "Before the suit was filed in Massachusetts state court, AIGhad commenced arbitration proceedings."

The suit in Suffolk Superior Court alleges that AIG inconnection with the Trenwick America Reinsurance Corp. filed the$73 million in allegedly inflated claims to cover losses onworkers' compensation, occupational accident and industrial aidpolicies in 2004.

According to the complaint only $15 million in claims may belegitimate.

Stamford, Conn.-based Trenwick America Reinsurance Corp. washired by the syndicate to assess the legitimacy of the claims. Theplaintiffs allege that the company colluded with AIG in an inflatedclaims scam.

No Trenwick spokesman was available for comment. The carrier iscurrently in bankruptcy.