Edward Liddy, the new CEO of the now government-controlled American International Group, assured state insurance regulators that the insurance units were sound during a briefing here at the fall meeting of the National Association of Insurance Commissioners.
In an exclusive interview with National Underwriter, Liddy said the insurance units of AIG are “absolutely safe and extremely well capitalized.” A plan is being developed now to sell assets and will be made public “as soon as we can,” he said.
Liddy declined comment on whether the insurance or leasing units would be sold and whether there had been an uptick in surrender activity.
Sandy Praeger, Kansas insurance commissioner and NAIC president, said in an interview after the meeting that the briefing had given her the assurance that the units were safe. She said that it would be up to management to decide what units are sold, as it is with any company, but that the only thing that policyholders would notice would be a different name on their contracts. She said there was no indication given during the briefing that there was an uptick in surrenders or cancellations of contracts.
Joel Ario, Pennsylvania insurance commissioner, said the balance sheets of the insurance units haven’t changed and that “it is a victory for state insurance regulation because the strength of those operations had given federal officials the confidence a solution should be developed for the company.”
The insurance companies are among the units with the greatest value, he continued. He said some may be sold and that, in fact, he had fielded a number of inquiries on that point. “If there is an orderly disposition, competition for those companies [insurance units] will be fierce.”
Ario declined comment on whether there had been an uptick in policy cancellations and surrenders and whether in this situation, federal authorities could preempt state insurance regulators.
In a separate briefing, state legislators wanted to know if their constituents’ value in contracts would be safe, according to one attendee in the closed session. Legislators expressed concern that fear over the companies’ soundness would produce a run on the bank, this source said. The legislators were assured that the companies are sound.