AIG Considers Sale of Annuity-Issuing Subsidiaries
September 20, 2008
AIG, the beleaguered insurance giant that sold $10.8 billion worth of fixed and variable annuities in the second quarter of 2008—more than any other U.S. company—may sell its annuities units as well as its aircraft-leasing and domestic automotive businesses to raise cash, the Wall Street Journal reported.
The report did not say which annuity units AIG might sell. AIG subsidiaries that issue annuities include AIG Retirement (formerly AIG VALIC), which provides variable annuities to the 403(b) retirement market, AIG SunAmerica, which offers Polaris and Seasons variable annuities, and AIG American General, which offers individual variable and fixed annuities.
AIG was said to have considered shifting assets from its healthy, state-regulated insurance businesses to its holding company, which would help the holding company respond to demands for cash or collateral, the report said. But state insurance commissioners blocked that plan.
Last Thursday, the National Association of Insurance Commissioners (NAIC) issued a statement that said in part, “Throughout the AIG financial holding company’s liquidity crisis consumers remained protected by insurance regulatory rules that prevented the parent company from simply raiding capital from its profitable and well-capitalized insurance subsidiaries. A coordinated effort by the nation’s insurance regulators ensured that no policyholder assets were used for any part of this transaction.”
AIG is not suffering due to the performance of its insurance firms, said Melissa Gannon, vice president of insurance and bank ratings at The Street.com. She has reviewed the 71 AIG insurance subsidiaries and found them to be sound.
“They are strong companies. They have the money to pay their claims. Some are suffering a little bit from the mortgage-backed securities crisis ... but they are well-capitalized and seem to have enough capital to withstand that. I wouldn't see any of the regulators taking over individual companies," Gannon said.
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