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States Mobilize to Protect AIG Customers
Gavin Magor
09/18/08 - 02:07 PM EDT
Updated from Sept. 17
The National Association of Insurance Commissioners announced that state insurance regulators have been mobilized to ensure that policyholders of AIG's(AIG Quote) 71 U.S. insurance subsidiaries remain protected.
The oversight will continue as AIG operates under the $85 billion credit facility offered by the Federal Reserve.
The NAIC said that it has established a working group, led by New York State Insurance Superintendent Eric Dinallo and Pennsylvania Insurance Commissioner Joel Arioto, to oversee AIG insurance interests and to coordinate with federal regulators as necessary.
Sandy Praeger, the NAIC president and Kansas insurance commissioner, said Wednesday: "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.
"Claims from individual policyholders are given the utmost priority over other creditors in these matters -- and, in the unlikely event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds," Praeger said. "These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits, similar to the FDIC's coverage for bank accounts."
Praeger said yesterday that, "We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay."
Further providing confidence for AIG policyholders, the NAIC's Praeger said regulators will oversee any proposed sale of the company's subsidiaries.