So What If You Are An AIG Customer?

September 18, 2008

Florida’s insurance commissioner say’s don’t panic if you are an AIG customer, regardless of all the news about the company you might read or watch.

“I have been monitoring the AIG situation very closely; and I have been in contact with my fellow regulators in New York and Pennsylvania – the two states with primary regulatory control over the AIG companies involved,” said Florida Insurance Commissioner Kevin McCarty. ““The news we are continuing to hear is that the primary financial problem is with the AIG holding companies, not the insurance companies, and that the holding company issue is being resolved by the $85 billion loan from the federal government.”

The Federal Reserve has made an $85 million loan to keep AIG afloat and out of bankruptcy.

“We have been told that the insurance companies are solvent and will be able to pay claims. It is important that policyholders continue to pay their premiums to ensure that their coverage does not lapse.

There are 46 AIG subsidiary companies that operate in Florida. Of those,  34 sell property and casualty insurance and 12 sell life and health insurance. Only one, American General Property Insurance Co. of Florida, is headquartered in the state.

“I assure you that, if it should become necessary, we will immediately intervene if we feel that any one of the AIG companies operating in Florida will be unable to pay its claims and fulfill the promises made to its policyholders,” McCarty said.

In the event AIG had failed, there’s a fail safe in Florida. The Florida Insurance Guarantee Association. The state group backs up insurance companies with the ability to levy surcharges on policy holders of other insurance companies.

AIG released the following statement:

“The AIG Board has approved this transaction based on its determination that this is the best alternative for all of AIG’s constituencies, including policyholders, customers, creditors, counterparties, employees and shareholders. AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues. We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policyholders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis. We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG’s businesses to continue as substantial participants in their respective markets. In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG.

“We commend the Federal Reserve and the Treasury Department for taking this decisive action to address AIG’s liquidity needs and broader financial market concerns. We thank them for their leadership during this critical time for the global financial markets. We also thank Governor Paterson, Commissioner Dinallo, Commissioner Ario, the other state Commissioners, and the Office of Thrift Supervision for their willingness to assist AIG.

“Policyholders of AIG companies around the world can rest assured that AIG’s commitments will continue to be honored.”

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Written by William Reynolds · Filed Under News