Updated from Sept. 17
The National Association of Insurance Commissioners announced that state insurance regulators have been mobilized to ensure that policyholders of
71 U.S. insurance subsidiaries remain protected.
The oversight will continue as AIG operates under the $85 billion credit facility offered by the
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
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.
NAIC said the remaining 176 AIG entities are split between foreign and non-insurance. The lead U.S. regulator of the AIG financial holding company is the federal Office of Thrift Supervision.
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Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.