Word: aig
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...AIG looks for a capital infusion, it is also trying to sell off certain pieces of itself, such as its annuities unit. If you are a policyholder and the unit that you do business with gets sold, chances are nothing will change. The way insurance law - which is set at the state level - usually works is that when one insurance company buys the policies of another, all the terms and conditions stay the same...
What if the worst comes to pass and AIG goes into bankruptcy...
...have a fixed-rate annuity, or a life insurance policy, the ruling regulator is the state where you bought the policy. This is a little trickier. The payout AIG has promised you comes from assets it holds in its general account. If the state insurance commission believes AIG can't meet its obligations to policyholders - and a bankruptcy filing might be an indication of that - the insurance commission can step in. If that happens, there's a chance you won't immediately be able to cash out your policies, at least not without incurring a penalty. That's a tactic...
...worse comes to worse, the goal of regulators is going to be to move AIG policies to other insurance companies. That's worked in the past, but it's never been attempted with a firm of AIG's size...
...assume, repeat, assume, a bankruptcy that leads to liquidation. AIG would pay off as many of its claims as it could. (The good news is that as a policyholder, you're ahead of almost everyone else in line to get paid, including bondholders) If AIG's assets don't cover everything, then state guarantee funds would kick...