NEW YORK (Bloomberg) - American International Group Inc. (AIG), the insurer that set aside $301 million to repay state workers' compensation programmes it shortchanged, said rivals including Liberty Mutual Group Inc. also duped regulators.

Liberty Mutual, Hartford Financial Services Group Inc. and a predecessor of Travelers Cos. broke racketeering laws by "conspiring" to dump shared costs on AIG, the world's largest insurer by assets, while suppressing probes into their own practices, the insurer said in federal court papers in Chicago.

The allegation intensifies a dispute over who pays the bill for state insurance programs that compensate injured workers. The rivals participated in a national group that sued AIG in May, saying the insurer owed more than $1 billion tied to underpayments. AIG filed a third-party complaint last week, naming more than a dozen competitors.

The companies "embarked on a single-minded conspiratorial campaign to inflict maximum financial and reputational injury on AIG", the New York-based insurer said in a court filing made last week. "A number of these companies had engaged in the very same or similar practices that had been alleged against AIG."

In most states, companies that sell workers' compensation insurance must fund pools that serve as insurers of last resort to cover worker injuries at employers that pose unattractive risks. AIG agreed in 2006 to fund a $301 million programme after then-New York Attorney General Eliot Spitzer accused AIG of underreporting premiums used to calculate contributions.

The settlement fund covers underpayment from 1985 to 1996. The national group, representing 600 insurers working in 40 states, said AIG underpaid for 35 years. AIG also agreed to pay about $42 million in taxes related to workers' compensation as part of the 2006 accord.

AIG is "refusing to own up to its own false reporting conduct," said Christine Woolsey, a spokeswoman for the National Workers Compensation Reinsurance Pool, in a statement. "AIG systematically misreported its workers' compensation premiums for decades."

AIG said Liberty Mutual and the Travelers predecessor were cited in Florida probes into workers' compensation practices in the late 1990s. AIG is seeking an award of triple the damages it may have suffered. Chris Winans, spokesman for AIG, declined to comment.

Richard Angevine, spokesman for Liberty Mutual, and Jennifer Wislocki, a spokeswoman for St. Paul, Minnesota-based Travelers, declined to comment. Liberty Mutual, based in Boston, ranked second last year behind AIG in US workers' compensation sales, according to the National Association of Insurance Commissioners. Travelers ranked fourth and Hartford fifth.

Michael Moran, a spokesman for Hartford, based in the Connecticut city of the same name, also declined to comment.

AIG also named Ace Ltd., Chubb Corp. and Cigna Corp. as defendants.

Chubb is named in the lawsuit solely because of its relationship with the reinsurance pool, said John Degnan, chief administrative officer of the Warren, New Jersey-based insurer. "There are no allegations in the third-party complaint against Chubb for having engaged in the same nefarious practices that AIG did," he said in an interview.

Robert Grieves, spokesman for Bermuda-based Ace, declined to comment. Wendell Potter, spokesman for Philadelphia-based Cigna did not immediately return a call.

AIG's 2006 settlement, for a total of $1.64 billion, also involved the US Securities and Exchange Commission and the Department of Justice, and resolved allegations of improper reinsurance accounting and sales practices.

AIG apologised in the agreement, saying it regretted the conduct that led to Mr. Spitzer's suit.

"Providing incorrect information to the investing public and to regulators was wrong," the insurer said.