Don’t Panic About AIG Annuities, Pennsylvania Regulators Say
November 9, 2008
Pennsylvania's insurance regulators are warning residents who own annuities to fend off agents or brokers who try to panic them into a 1035 exchange by telling them that the issuers are insolvent. The warnings mentioned AIG annuity owners in particular.
"Consumers should understand the full impact of any decisions they may make before liquidating or replacing annuities they already hold," said State Insurance Commissioner Joel Ario. "If you liquidate or replace an annuity you currently own, you could incur significant surrender charges or experience adverse tax consequences.
"Our department is very concerned about inappropriate replacements and is monitoring the suitability of annuity sales for activity that would appear to take advantage of the recent turmoil in financial markets.
“I would urge agents selling these products to be mindful of their duties to consumers, and be certain that a thorough financial analysis is part of any recommendation to a consumer to replace annuity products," Ario added.
"Consumers should be particularly cautious if they are approached to liquidate annuities issued by an AIG insurance company because of the recent activity concerning AIG's holding company," he said.
"The AIG insurance companies are separately regulated by state insurance regulators and our laws provide strong protections for policyholders. AIG insurance companies are meeting their obligations to their policyholders. Consumers who feel pressured to replace annuities because of claims the insurer is under financial stress are encouraged to contact the department."
Annuities are insurance products regulated by the Pennsylvania Insurance Department, which licenses both insurance companies and producers (agents) and monitors their activities. A special consumer alert on annuities can be found at insurance.state.pa.us .
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