AIG customers shouldn’t panic, Florida Insurance commissioner says
By Jim Ash • Florida Capital Bureau Chief • September 17, 2008
TALLAHASSEE — Florida customers of insurance giant AIG shouldn’t panic, despite unsettling headlines generated by the latest Wall Street crisis, Insurance Commissioner Kevin McCarty said today.
"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," McCarty said in a statement released this morning.
AIG has 46 subsidiary companies operating in Florida and of those 34 sell property and casualty insurance and 12 sell life and health insurance, according to the Office of Insurance Regulation. Only one AIG affiliated company, American General Property Insurance Co., is headquartered in Florida.
OIR spokesman Ed Domansky said the department doesn’t have enough information to estimate how many policyholders that represents.
Late last night, the Federal Reserve announced it had stepped in with an $85 billion loan as part of a partial government takeover to rescue the ailing conglomerate. Most of the speculation on Tuesday centered on whether AIG would go the way of Lehman Brothers, the nation’s fourth-largest investment bank, in filing for bankruptcy.
"Right now, we’re really trying to play up the good news," Domansky said. "This does not affect the insurance companies."
Even if the news were bad, McCarty pointed out that there are backups for insurance companies that get into financial trouble, including the Florida Insurance Guarantee Association, which has the ability to raise funds from policy holders of the more than 2,500 companies doing business in Florida.
AIG posted the following message on its Web site this morning:
"The Board of Directors of American International Group, Inc. (NYSE:AIG) issued the following statement in response to today’s announcement by the Federal Reserve Board that the Federal Reserve Bank of New York is providing a two-year, $85 billion secured revolving credit facility to AIG that will ensure the company can meet its liquidity needs:
"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."