AIA policyholders in Singapore are now unlikely to have their policies sold or transferred to another insurer, after their insurer's troubled American parent said last night it will not sell off its coveted foreign life insurance units.
This announcement offers a new measure of certainty to policyholders at the end of what has been a heartstopping two weeks that began with the near collapse of American Insurance Group (AIG) in the United States.
Staff members at AIA Singapore were also jubilant last night after AIG, one of the world's largest insurers, said in a statement that it will retain majority ownership of the lucrative Asian operations but will seek 'minority strategic investors' to take a slice of the business.
This will let AIG retain the jewels in its crown - the foreign insurance units - while easing some of the financial pressure by attracting new investors.
One Singapore agent, who is also a policyholder, told The Straits Times: "It comes as good news. For some of us, AIA is our first career, and all these events over the past few weeks have a major disruption to our lives."
The 39-year-old said the news was well received by many of his colleagues and his clients: "Confidence is coming back, and we've been receiving new business premiums already."
AIA president Mark Wilson said in a statement that the "announcement is good news for AIA, our policyholders, staff, agents and distribution partners. We are delighted to be able to draw a line under the uncertainty of the last few weeks."
AIA Singapore has had a traumatic time of late with clients besieging its offices two weeks ago to redeem policies after AIG was bailed out by the US government to the tune of a US$85 billion (S$123 billion) loan.
There were fears that AIG was so short of ready cash that it would reduce the capital of its subsidiaries or tap into its booming Asian operations for cash.
A series of statements from AIA and the Monetary Authority of Singapore eventually calmed the panic but the mood of uncertainty remained over the firm.
That will have been relieved, but only partly, by yesterday's announcement out of New York.
Lawyer Valerie Quek, 26, is among a group of AIA policyholders that say they feel 'safer' now that AIA Singapore will not be sold to another insurer.
"I like the AIA service and in this kind of environment now, I don't want more uncertainty,' she said.
Other policyholders were more nonchalant, saying they had already braced themselves for change.
"I guess the news means that we don't have to wonder about another insurer taking over our policies," said AIA policyholder Low Ee Ping, 32.
"But I was not really worried about that, because I think the transition to another insurer would have been smooth because so many people have AIA policies," she added.
"I don't think it would have been allowed to descend into chaos."
But Ng, 35, an AIA agent and policyholder, said that despite the upbeat mood in the office, there was still caution in the air. "It's good news presently, but it might only be temporary. AIG might still sell AIA later, and for some of us, that is a big cause for concern," he said.
Ng cited another potential concern - the high interest rate AIG has to pay the US Federal Reserve. This stands at 8.5 percentage points over Libor, the rate banks lend to each other.
This rate has soared to about 5 per cent amid the financial crisis so AIG's total interest rate has hit 13.5 per cent.
It has drawn US$61 billion on the credit facility so far.
AIA is one of the largest insurers here with 4,000 agents and 2.6 million policies.
Across Asia, AIA has over 20 million policyholders and over 200,000 agents, according to Mr Wilson.
AIG chairman and chief executive Edward Liddy said in New York yesterday that the firm is refocusing on its traditional strengths in property and casualty underwriting.
"We have a number of remarkable businesses with leading market positions and significant competitive advantages that could not be recreated today," he said.
AIG plans to retain its US property and casualty and foreign general insurance business.
The sale of other units will be used to pay off the government loan, while additional funds will be used to help address the insurer's capital structure.
Print Article 
Email Article 
