AIG Issue Update
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RJF Agencies responds to U.S. government’s loan to AIG
MINNEAPOLIS (September 17, 2008)—RJF has been monitoring the situation with AIG closely, and wanted to bring you up to speed on the recent developments.
The Federal Reserve Board authorized the Federal Reserve Bank of New York late Tuesday to lend up to $85 billion to the American International Group (AIG) to help alleviate the company’s liquidity problems and stave off potential bankruptcy for the financial giant. In exchange the U.S. government will receive up to a 79.9 percent equity interest in AIG.
AIG’s board of directors said this loan will “protect all AIG policyholders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis.” They further stated that this loan will enable AIG businesses to “continue as substantial participants in their respective markets.”
AIG, which is the holding company for several insurance and other financial services companies including AIG Commercial Insurance, maintains over $1 trillion in assets and substantial equity. It is the parent company that has been experiencing financial issues, not the commercial insurance division. Insurance policies are issued by separate entities that must maintain compliance with regulatory agencies including the availability of assets that could be used to pay claims. AIG Commercial Insurance holds nearly $27 billion in surplus and invested assets of more than $70 billion.
RJF and its trade association, The Council of Insurance Agents and Brokers, will continue monitoring this situation, and inform clients of any pressing issues as they arise. RJF executives will participate in a conference call with AIG executives this afternoon. Additional developments from this discussion will be shared with you shortly thereafter.
You can read copies of statements issued AIG and the Fed by clicking below.
AIG Statement
Fed Statement