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February 17, 2012 at 06:17 AM
American International Group has regained its role as a primary seller of insurance and investment products through banks, president and CEO Robert Benmosche said at an investment conference Wednesday.
Benmosche made his comments at the Bank of America Merrill Lynch Insurance Conference, held in New York.
Discussing the viability of its primary operating businesses, especially SunAmerica, its domestic life insurance subsidiary, SunAmerica, Benmosche said, “look at the positive flows we’ve had; enormous flows.”
He also said that AIG has purchased some of the sub-prime securities collateralized by reserves held by its life insurance subsidiaries and sold to the Federal Reserve Board in 2008 to gain cash to deal with its problems.
The Fed put the securities in facility known as Maiden Lane II and recently completed sale of all the securities held in the portfolio through an auction conducted by several broker-dealers.
He disclosed that AIG had “bought some of the Maiden Lane assets,” but cautioned that AIG’s purchases of Maiden Lane assets were small compared to its other purchases of mortgage-backed debts.
“A lot of people think a lion’s share of Maiden Lane II is still owned by AIG after the auctions; that is not the case. It’s a fraction of what people believe it is,” he said.
As to SunAmerica, “We’re back in all distribution systems,” Benmosche said. “We are back in banks and we’re still the leader in the banking system.”
He also discounted the impact of low interest rates profitability of sale of SunAmerica products.
“if you believe in the Fed and the low interest rate environment over time, people still put their money in annuities,” Benmosche said.
“They still want variable annuities with guarantees. Our challenge is to price it right, and we do price it right. Everything we do is in that 11% to 13% range on an return-on-equity basis, and we’re working hard to accomplish that.
