AIG Insurance Companies in Good Standing, Policyholders Protected

Despite recent news of financial trouble for American International Group (AIG), the National Association of Insurance Commissioners assures consumers their AIG insurance policies are backed fully.

“[AIG’s] insurance subsidiaries are solvent and able to pay their obligations,” said Sandy Praeger Kansas insurance commissioner and president of the National Association of Insurance Commissioners.

Because state insurance commissions hold insurance companies to high standards in order to sell insurance in their states, AIG’s 71 insurance companies have sufficient funding, remain profitable and could be sold to bail out AIG’s financial holding company, which is subject to federal oversight through the U.S. Office of Thrift Supervision.

“AIG’s non-insurance parent company is federally regulated and, therefore, not held to the same investments, accounting and capital adequacy standards as its state-regulated insurance subsidiaries,” Praeger explained. “It will likely be the insurance subsidiaries that will be sold in an attempt to return the AIG parent company to a more stable financial position.”

Insurance regulatory rules prevent AIG’s parent company from raiding its profitable insurance subsidiaries to pay off debts, according to the insurance association. And an ad-hoc oversight committee chaired by New York State Insurance Superintendent Eric Dinallo is overseeing AIG insurance interests to ensure policyholders are protected and insurance interests aren’t compromised.