U.S. insurance giant American International Group says it paid victims of Bernard Madoff's Ponzi scheme millions of dollars for losses covered by its policies.

AIG said it denied claims from Madoff victims who had withdrawn more money from their Madoff account than they had invested. Nevertheless, the company said it had honored hundreds of claims under homeowner policies that protected them against "fraud, embezzlement or forgery," the New York Post reported Friday.

Madoff pleaded guilty to running a massive Ponzi scheme that lost tens of billions of dollars. Many victims have gone to court to seek compensation.

The Post said most of the policies covered losses up to $30,000. A few covered up to $100,000.

A source told the Post the insurance was typically bought to guard against "identity theft or credit card fraud," not fraud perpetrated by an investment broker.

On Wednesday, a Los Angeles couple, Robert and Harlene Horowitz, sued AIG for failing to honor their claim. The couple said they had $8.5 million in their Madoff account, the newspaper said.

"In this case, we declined the plaintiffs' claim because they received more money from Madoff through withdrawals in their account than they had deposited," said AIG spokeswoman Christina Pretto.