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Hi, very nice post. I have been wonder’n bout this issue,so thanks for posting
ReplyHi lioninvestor
Recent news updated that AIG is being bailed out for the third time by the US govt. Attempts to sell off its asian units i.e. AIA, has not been successful. AIA may be sold to the US govt.
From AIA policyholders’ pt of view, does it matter if ownership of AIA changed hands, or worse, be broken up and sold off to different owners? Does what is stated in your article – that the funds are ringfenced in Singapore – still hold regardless of ownership.
How about if the AIA business has to be wound up – would the ringfencing still hold?
Thanks a lot.
ReplyI think as long as AIA continues operating, policy holders should be fine.
In the event that they are unable to meet its obligations, MAS will, as far as reasonably practicable, secure the continuity of its life insurance policies. One option that MAS may consider is to facilitate the transfer of the policy obligations to another insurer.
In the worst case scenario where AIA has to be wound up, the Insurance Act provides for the setting up of a Policy Owner’s Protection Fund (“PPF”) to compensate policy owners. Under the current provisions, the PPF will cover up to 90% of an insurer’s liability on any life policy.
ReplyI am expecting to start receiving my first installment of my annuity “Dollar For Life” from December onwards which I purchased from AIA.
Do you think that I shouldn’t be worried about it and entrust that AIA would be able to fulfill its obligation. Do I have any other options, say to take it out now and place it with another insurance company like NTUC or Great Eastern. I bought this annuity seven years ago and I am reaching 62 in December.
AIG should be able to ride out this crisis. However, I think insurance agents should also be made to obtained CFA certification before they start selling products that are linked to investment products to protect the interest of the general public. Otherwise, they should only be allowed to sell term insurance.
ReplyHi LionInvestor,
Do you think AIG will survive this credit crisis? The good thing is Fed Res extended $85b to them that need to be repay back in 2 years. The bad thing is their rating will drop thus needing this handout. Given it has a large business with lots of monthly installment payment etc, I thought they can ride out of this mess if given the time.
ReplyHi Kenneth,
AIG will probably not go bust as the Fed cannot afford to let them fail.
Going ahead, they will need to sell off a lot of their assets to settle their liabilities.
The damage to their reputation will also affect their new business.
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