American International Group Inc., a holding company that is not an insurance company, is asking its insurance subsidiaries for assets, says Ohio Insurance Director Mary Jo Hudson.
“We are actively involved with the situation on [the] national level to ensure that the necessary safeguards for the protections of policyholders remain in place,” Hudson says in one of several statements released by top state insurance regulators in the past 2 days.
Hudson notes that the Ohio Department of Insurance regulates AIG insurance companies licensed in Ohio.
- Sandy Praeger, the Kansas commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo., has put out a statement that also has been released by the insurance regulators in states such as Iowa, Massachusetts and New Hampshire.
AIG wants insurance subsidiaries to trade liquid assets for non-liquid assets from the parent company, Praeger says in her statement.
Here is a condensed version of the Praeger statement:
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.
In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.
As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.