NU Online News Service, Aug. 2, 3:15 p.m.EST

Liberty Mutual says it likely will appeal the preliminaryapproval given to a $450 million settlement American InternationalGroup Inc. reached with companies that alleged AIG underreportedpremiums to a workers’ compensation program.

Liberty Mutual is mulling its options and, “in all likelihood,”will be appealing the approval, says John Cusolito, Liberty Mutualspokesman.

U.S. District Court Judge Robert W. Gettleman released hiswritten opinion to grant preliminary approval of the settlement andcertify a new class of companies, which needed to be done sinceLiberty Mutual originally filed the lawsuit against AIG.

Gettleman had already told the insurers during a court hearing that he was going togrant a preliminary approval to the settlement.

AIG announced at the start of the year that it agreed to pay a group of companies—ACE, Auto Owners, Companion,FirstComp, Hartford, Technology and Travelers—$450 million tosettle a lawsuit filed by Liberty Mutual’s Ohio Casualty and Safecosubsidiaries in April 2009 on behalf of a pool of insurers allegingthat AIG underreported workers’ compensation premiums over at leasta 20-year period.

Liberty Mutual has worked to stop the settlement, saying it comes nowhere near the trueextent of AIG’s underreporting and that it was made because AIGalso agrees to release the companies from a lawsuit it filed against them.

Gettleman says he only needs to determine if the proposedsettlement “is within range of possible approval,” not to conduct acomprehensive inquiry.

“No more detail is required for the court to find at this stagethat, compared to the strength of the case, the settlement figureis fair, adequate and reasonable,” Gettleman writes. The settlementhas been approved by insurance commissioners in all 50 states andthe District of Columbia, he adds.

The case history goes back to 2007, when the National Council onCompensation Insurance (NCCI) originally filed the suit on behalfof a pool of insurers, but the case was dismissed because NCCIlacked jurisdiction. Liberty Mutual then took up the case and filedanother lawsuit alleging AIG had underreported workers’compensation premiums to residual insurer National Workers’Compensation Reinsurance Pool, which has spent an average of $2million per month over the last year on legal fees.

AIG allegedly unreported to purposefully reduce its market sharein the workers’ compensation market to skew tax obligations ofother members of the pool.

Gettlement has requested another hearing Aug. 5 to work outdetails of a notice to be sent to all class members. Each companyin the class can decide to opt out of the settlement.

Liberty Mutual stands to gain $99 million from the settlement ifit decides to join, according to a source close to the case. Ifenough companies from the class chose to opt out of the settlement,AIG can withdraw its settlement offer.