Alaska attorney general says state settles suit with pension actuary for $500 millionBy Becky Bohrer, AP
Friday, June 11, 2010
AG: Alaska settles pension suit for $500 million
JUNEAU, Alaska — Alaska’s attorney general said Friday that the state has settled a breach of contract and professional malpractice lawsuit against its former actuary for $500 million.
Dan Sullivan said he believes the agreement between the Alaska Retirement Management Board and Mercer Inc. to be the largest of its kind. He called it a “great result” for Alaska state workers and retirees.
The matter dates to late 2007, when the state sued Mercer for at least $1.8 billion, alleging mistakes by the company had contributed to an $8.4 billion state pension deficit. Mercer had been actuary for the state’s Public Employees’ Retirement System and Teachers’ Retirement System pension plans. It had stood behind its work.
Stock market declines and soaring health care costs also contributed to the multibillion-dollar shortfall, the Department of Law said.
While the state was prepared to go to trial next month, Sullivan said it faced risks in doing so, including the potential for future countersuits and perhaps years of costly appeals. Not every case should be settled, he told reporters from Anchorage, but given the uncertainties in, and complexities of, this case, he felt settling was the right thing to do, and that the result, “overall is an outstanding one.”
Under terms of the settlement, the lawsuit would be dropped in exchange for a $500 million payment. Minus court costs and fees for outside attorneys, Sullivan said the state public pension systems will get about $403 million. Payment is due within 60 days, and the state could revive its suit or file another if it isn’t paid, he said. But he said he has no reason to believe it won’t be.
Mercer confirmed the settlement, in which it expressly denies liability. It said $100 million of the $500 million would be covered by insurance.
In a statement, Mercer said it decided a settlement was in the best interests of the company for several reasons, including the uncertainty of the outcome of a jury trial in Juneau, the complex, technical nature of the claims, and the amount sought.
“Mercer is committed to serving its clients worldwide with the highest level of service and professionalism,” the statement said.
Tags: Alaska, Juneau, North America, Personnel, United States