Wednesday, September 17, 2008

AIG Insurance in Trouble

American International Group Inc ("AIG"), with 89 years of history, is in deep financial problem back in USA. The Federal Reserve Board is pumping in US$85 billion to safeguard its operations otherwise it could be the worst corporate bankruptcy incident. With the fund injection, USA government will have a 80% stake in AIG. This fund injection, available for two years, is only to assist AIG to meet its obligations.

In the midst of financial chaos, AIG has to issue a press statement to cool down the concerns of policyholders and annuity holders.

Back home in Malaysia, AIG's presence has been localised since 1 June 2008. A local company by the name of AIG General Insurance (Malaysia) Berhad has taken over the general insurance operations from AIG, the American Home Assurance Company but would still remain as a subsidiary of AIG. Those days they were famously known as American International Assurance ("AIA").

Does AIG Malaysia has to issue a press statement to inform their policyholders that they are still financially sound? Why do I ask this question? Because AIG has ran out of cash! Rumour has it that AIG will be drawing funds from their overseas subsidiaries.

I remembered when I was approached by AIG Malaysia's insurance agent, they would proudly present to me that AIA (those days lah) is the number one in the world and Malaysia and did mention that their worldwide assets at hand exceeds US$xxx billions, larger than a number of countries' assets.

For now, they can't mention the assets as AIG has been completely wiped off and if not for the US$85 billion fund injection, AIG would have been liquidated.

American Home Assurance Company Singapore has seen policyholders / investors queuing up to cash out / redeem their insurance policies and investment products. Better safe than never approach? To allay fears, Monetary Authority of Singapore has issued a press statement to that effect.

In the first place, how could so many USA financial institutions got themselves into such deep shit? I thought they have the best corporate practices as being boasted all the time but now, American citizens aren't sure whether their banks could safeguard their savings kept with the banks. Who will be next?

Hopefully this unfortunate financial situation will not jeopardise their sponsorship for my favourite club, Manchester United ....... hehe

Reading: AIG rescue at hand, government to take stake - Reuters
Reading: AIG Employees on Edge as Once-Safe Company in Turmoil - Insurance Journal
Reading: Is Your Insurance Safe With AIG? - Wall Street Journal
Tags: AIG, AIA, American International Group Inc, American Home Assurance Company, American International Assurance, Corporate Bailout, Corporate Bankruptcy, Federal Reserve Board, Monetary Authority of Singapore

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6 Comments:

Blogger LynMay said...

Shocking news isn't it.. I couldn't believe my eyes when I read the news today..

17 September, 2008 21:56  
Blogger Borneo Falcon said...

Lucky I didn't buy any insurance from the company

18 September, 2008 08:36  
Anonymous cazzycazz said...

My Aunt called me last night after hearing the news & she did her policy cancellation early this morning. To her amazement, quite a number of ppl are rushing to surrender their policies.

In actual fact, AIA Life Ins business in Msia has been declining for the past few years and their market share is quite small. Fund performance wise has been so so only, should anyone of you still holding the dinosaur type of CRITICAL YEAR PLAN INSURANCE, it is best to check with them on the dividends & cash value.

On the other hand, their general insurance has always been good and i too, have to admit that they do offer very good & comprehensive type of insurance for company & staff.

I wish AIA well and nope, i am not their policy holder... lol....

18 September, 2008 17:38  
Blogger Johnny Ong said...

lynmay - yeah, a so to say solid company has gone down the drain within days

borneo - haha, what wld u have done

18 September, 2008 17:44  
Blogger foongpc said...

OMG! I have insurance policy with AIA. Will it be affected? I never thought this can happen because always thought AIA is very financially secure.

20 September, 2008 01:10  
Blogger Johnny Ong said...

foong - well, the malaysia aig has given assurance that it could meet all its obligations. in future, nobody cld tell

23 September, 2008 11:44  

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