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American International Group Inc. said on Monday that it had reached a settlement resolving a $2 billion lawsuit accusing a Philadelphia-area firm overcharging it for life insurance policies acquired from elderly people.

The settlement between ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s Lavastone Capital LLC unit and Coventry First LLC came as the parties awaited a ruling from U.S. District Judge Jed Rakoff in Manhattan following a non-jury trial that ended in October.

As part of the deal, Lavastone will be able to transfer Coventry’s servicing of ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s life settlements portfolio to another party, the parties said. The deal also allows ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s unit to freely sell policies that were originated by Coventry.

Life settlements involve the sale of life insurance policies by policyholders for more than their cash value and less than their face value to investors, who then pay the premiums and collect the payout when the individuals die.

Coventry, headed by founder Alan Buerger and owned by Montgomery Capital Inc., describes itself on its website as the “leader and creator” of the life settlement industry.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s Lavastone bought nearly 7,000 life settlements from Coventry with a total face value of $20 billion from 2001 to 2011, when ÌìÃÀÍøÕ¾´«Ã½´«Ã½ stopped acquiring life settlements.

Lavastone, which filed its lawsuit in September 2014, said the Fort Washington, Pennsylvania-based firm’s actions caused it to pay about $160 million in hidden markups and fee overcharges.

The alleged scheme ramped up during the financial crisis in 2008, when ÌìÃÀÍøÕ¾´«Ã½´«Ã½ was receiving government bailouts to avert its collapse, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ contended at trial.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ at trial sought damages of $2.02 billion based on its demands that Coventry disgorge all of the fees it collected and its request for Rakoff to impose triple damages under the civil racketeering statute.

The case is Lavastone Capital LLC v. Coventry First LLC et al., U.S. District Court for the Southern District of New York, No. 14-7139.

(Reporting by Nate Raymond in New York and Nikhil Subba in Bengaluru; Editing by Maju Samuel and Alan Crosby)

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