Although parent company American International Group (AIG) is in a financial crisis, the National Association of Insurance Regulators said that AIG’s state-regulated insurance subsidiaries, which help make AIG the world’s largest insurer, are still able to pay claims.
The company, which was on the verge of bankruptcy Sept. 15, received $85 billion in credit from the Federal Reserve Sept. 16. It’s anticipated that the company will sell off some of its assets to ensure quick repayment of the loan. If the loan isn’t repaid, the federal government has the right to take up to an 80 percent stake in the company.
It’s unclear what AIG will sell, but analysts quoted in several reports believe AIG’s aircraft leasing unit, International Lease Finance Corp., and American General, which it bought in 2001, along with billions of dollars in real estate around the world could be up for sale in the near future. NAIC President Sandy Praeger estimated AIG’s insurance subsidiaries might also be sold off.
"AIG’s non-insurance parent company is federally regulated and, therefore, not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries," said Praeger, who is also the Kansas insurance commissioner. "The insurance subsidiaries are solvent and able to pay their obligations. In fact, it will likely be the insurance subsidiaries – or their valuable blocks of business and high- quality assets – that will be sold in an attempt to return the AIG parent company to a more stable financial position."
Until AIG is stabilized, NAIC has established a working group to oversee AIG insurance interests and to coordinate with federal regulators as needed.
