The September turbulence surrounding the bailout of AIG has added to an ongoing debate: whether the Treasury Blueprint’s plans for an Optional Federal Charter (OFC) and an Office of Insurance Information (OII) will be enacted.
The controversy erupted when the American Council of Life Insurers (ACLI) and the American Insurance Association (AIA) more or less went on the offensive, reiterating their support for speedy formation of an OII and citing AIG’s near-collapse as proof that such an entity is necessary.
The National Association of Insurance Commissioners (NAIC) was quick to reassure policyholders of AIG that their policies were sound and that the 71 insurance companies that were part of the non-insurance parent company were fiscally solid. Indeed, in a statement issued the day after the bailout was announced, NAIC Commissioner Sandy Praeger said, “AIG’s non-insurance parent company is federally regulated and, therefore, not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries.” She further pointed out that those U.S.-based, state-regulated insurance subsidiaries were the most likely components of AIG to be sold to raise revenue for the parent company, since their assets and blocks of business were of high quality. The other 176 financial services companies that are part of AIG are premium finance companies, non-U.S. insurance companies, banks, and securities firms, such as independent broker/dealers Royal Alliance, FSC Securities, and AIG Financial Advisors.