March 3, 2009

AIG Frequently Asked Questions

Before acting hastily, consumers need to know the facts.  The following contains information compiled from the NAIC and Missouri Department of Insurance, Financial Institutions, and Professional Registration.  The information is designed to specifically address the concerns of AIG consumers. 


Should you have any additional questions please feel free to contact the Missouri Department of Insurance, Financial Institutions, and Professional Registration’s Consumer Affairs Division at 800-726-7390.

Question: AIG just posted a $61.7 billion loss for the fourth quarter of 2008 and the government is bailing them out. What does that mean for insurance consumers with AIG policies?

Answer:  AIG is an international financial holding company with businesses ranging from aircraft leasing through investment services through insurance.  The policy you hold is written by an insurance company that is an operating subsidiary of AIG.  Those insurance companies are financially solvent. Insurers are subject to conservative financial standards required by state regulators, and these standards are intended to allow insurers to weather times of financial distress. State insurance regulators and federal regulators, in cooperation with the new management of AIG, are taking steps to make sure that insurance customers of AIG subsidiaries remain protected.

Question:  Will the AIG insurance companies be able to pay claims?

Answer:  In short, yes.  The AIG affiliated insurance companies are financially solvent and able to pay claims. The financial issues facing the AIG Holding Company are occurring because of investments in risky mortgage-backed securities initiated by AIG financial products companies. Continued loss reports are due to those same investments and the newly announced government funding is primarily directed at continued losses from those same investments.

Question:  What are state regulators doing to make sure AIG insurance companies can continue to pay claims?

Answer:  State insurance regulators are closely monitoring the financial condition of the AIG affiliated insurance companies and are reviewing any activity at the parent company that impacts insurance company assets.  Any significant transaction impacting an AIG insurance company, including sale of the company, is subject to state regulator approval. If AIG can line up a buyer for its insurance assets, state regulators are ready to approve any appropriate transaction on a coordinated basis.

Question:  Didn’t the government just bail out AIG? Why do they still need more money?

Answer:  Due to general economic conditions, almost everyone is losing money, including AIG and other insurance companies. When the government stepped in to assist AIG, the assumption was that the AIG Holding Company could sell its valuable insurance operating subsidiaries to raise funds to pay back the loan. Unfortunately, the credit market was and continues to be basically frozen, and no sales have taken place.

Question:  What happens if AIG affiliated insurance companies get into financial trouble?

Answer:  State regulators have a variety of tools available if it appears that an insurer is not going to be able to fulfill its promises to policyholders. Your state regulator can take over management of an insurer through conservation or rehabilitation. Even if liquidation of an insurance company is necessary, policyholder claims will generally be paid either by the insurance company or by a guaranty fund, which all states have in place to provide coverage to policyholders. This protection applies to direct business written by authorized licensed insurers. For more information, visit the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) at www.nolgha.com or the National Conference of Insurance Guaranty Funds (NCIGF) at www.ncigf.org.

Question:  Are the insurance and annuity policies I purchased from AIG safe or am I going to lose my money?

Answer:  Your policies are safe. AIG's insurance companies are solvent and able to honor policyholders' claims. Your state's insurance department will continue to closely monitor the situation to ensure policyholders are protected and that there will continue to be sufficient assets to pay claims.

Question:  I own an AIG American General fixed annuity. Is that protected by state insurance solvency standards in the same way that insurance policies are?

Answer:  Yes. Fixed annuities are considered a type of life insurance, and as such are protected by the same solvency and guaranty framework as traditional life insurance. If at some point in the future AIG insurance companies or their assets and blocks of business are sold, fixed annuity-holders should experience no changes to the way their policies are administered -- other than the fact that their correspondence may come from a different company. This is not unique to AIG; insurance companies are bought and sold everyday. Your benefits as defined in the original annuity contract remain the same in a sale.

Question:  Should I cash in my insurance and annuity policies and purchase insurance from another insurer?

Answer:  As stated above, the AIG insurance companies are solvent so your policies are not in jeopardy. Whether you should cash in your insurance policy or switch insurance to another insurer is, as always, a personal decision. Please be aware that some policies may contain surrender charges and/or cancellation penalties. Contact your state insurance department to find out all the information your agent or broker should give you before you make a decision. Talk to your financial adviser before making any decisions. If you have any insurance policy with an AIG company and someone tells you to replace it because of the troubles at AIG's parent company or supposed trouble at the insurance company, call your state insurance department.

Question:  Should I pay the insurance premium bill that I just received from AIG?

Answer:  Yes, in order for your coverage with AIG to continue, you will need to pay the insurance premiums. Failure to pay your premiums can result in the termination of your insurance policies by the insurance company.

Question:  Would my insurance and annuity policies have been protected had AIG been declared insolvent and ordered to be liquidated by a court?

Answer:  There are guaranty funds in place in all states which act as a safety net in the event an insurer becomes insolvent. You may obtain information about your state's guaranty funds by contacting your state insurance department.

Question:  How can I check on the financial status of a specific AIG insurance subsidiary?

Answer:  You can search for each individual AIG subsidiary in our Consumer Information Source (CIS). Here you will find financial information specific to the company as well as complaint data and licensing information.

Question: Is AIG going bankrupt?

Answer: AIG is an international financial holding company with numerous businesses. Your insurance and annuity policies are written by AIG’s insurance companies. Those companies are financially strong and their assets are protected by state regulators.

Question: Are the insurance and annuity policies I purchased from AIG safe or am I going to lose my money?

Answer: AIG’s insurance companies are financially strong and fully able to honor policyholders' claims. The New York, Pennsylvania, Connecticut, Missouri and other state of domicile State Insurance Departments, continue to closely monitor the situation to protect the assets of the 71 financially solvent insurance companies so they can continue to pay claims.

Question: Should I cash in my insurance and annuity policies and purchase insurance from another insurer?

Answer: As stated above, the AIG insurance companies are financially strong. Whether you should cash in your insurance policy or switch insurance to another insurer is, as always, a personal decision, but should not be based on a fear that the AIG insurer is in financial trouble. Please be aware that some policies may contain surrender charges and/or cancellation penalties. If you have any insurance policy with an AIG company and someone tells you to replace it because of the troubles at AIG’s parent company or suggested trouble at the insurance company, call the department’s consumer hotline immediately at 800-726-7390.

Question: I heard the government may take over AIG. What are state regulators doing to make sure AIG insurance companies will continue to be able to pay claims?

Answer: The agreement between AIG and the Federal Reserve protects the assets of the insurance companies so they will be available to pay claims. Insurance regulators from any states with New York’s regulator at the helm established a working group to oversee AIG insurance interests during any transactions that take place and make sure policyholders continue to be protected during this process. Any significant transaction affecting an AIG insurance company will need approval from state regulators.

Question: What can I do if I am having difficulty getting through to AIG on the telephone?

Answer: You may obtain information about contacting the company or filing a complaint with the Missouri Department of Insurance, Financial Institutions & Professional Registration by visiting http://www.insurance.mo.gov/aboutInsurance/online.htm

Question:  Will this affect insurance companies and agents with business relationships with AIG?

Answer: It may. The department issued this open letter to insurers and agents in October of 2008.

Question: What number can I call to speak with someone at the department?

Answer: The department’s toll free consumer hotline is 800-726-7390. As an alternative, you may e-mail the department at consumeraffairs@insurance.mo.gov with your contact information and we will return your call as soon as possible.

For further information, contact: the department at (573) 751-2562.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

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