AIG issues statements to soothe policy holder concernsSeptember 17th, 2008 - 9:47 pm ICT by IANS
New York, Sep 17 (IANS) Following a bail out by the US government, leading global insurance and financial services giant American Insurance Group (AIG) has issued two statements here to soothe anxiety among all its constituencies.The US central bank, the Federal Reserve Bank announced here Tuesday that it was giving AIG a two-year, $85 billion secured revolving credit facility to ensure that the company can meet its liquidity needs.
In the first statement Tuesday, AIG said that its board “has approved this transaction based on its determination that this is the best alternative for all of AIG’s constituencies, including policy holders, customers, creditors, counter parties, employees and share holders.”
“AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues,” the statement said.
“We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policy holders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis,” it said.
“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,” the statement added.
“In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG,” the statement said.
“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.”
“Policy holders of AIG companies around the world can rest assured that AIG’s commitments will continue to be honoured,” the statement said.
In another statement Tuesday aimed at addressing policy holder concerns, AIG said that its life insurance, general insurance and retirement services businesses, including its extensive Asian operations, continue to operate normally and remain adequately capitalized and fully capable of meeting their obligations to policy holders.
“AIG continues to pursue alternatives to increase short-term liquidity in the parent company,” it said.
“Those plans do not include any effort to reduce the capital of any of its subsidiaries or to tap into Asian operations for liquidity.”
“The insurance policies written by AIG companies are direct obligations of its regulated subsidiary insurance companies around the world.”
“These companies are well capitalized and meet or exceed local regulatory capital requirements. The companies continue to operate in the normal course to meet obligations to policy holders.”
In particular, the statement noted the company’s long tradition of service in Asian markets, which are key to its future growth.
“Founded in Shanghai in 1919, the company has Asia as home to some of AIG’s oldest and most valued clients,” the statement said.
It said that AIG companies are fully committed to maintaining required capital levels in all of its subsidiaries and to meeting the needs of their customers around the world.
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Tags: american insurance group, american taxpayers, dinallo, federal reserve bank, financial services giant, global financial markets, global insurance, office of thrift supervision, revolving credit facility, state commissioners