New York - Edward Liddy, Chairman and CEO of American International Group Inc, has today announced that AIG Inc has decided to refocus the company on its core property and casualty insurance businesses which includes AIG South Africa Limited and AIG Life South Africa Limited.
The group also announced that it intends to generate sufficient liquidity to repay the $61bn owing to the Federal Reserve Bank of New York as at the 30th September and emerge as a smaller, more nimble company that is solidly profitable with good long–term growth prospects.
However the group will sell a number of other businesses in the group.
The deal means that AIG Inc’s international insurance operations, including those in South Africa, will continue to operate as normal.
Wayne Abraham, Chief Operating Officer of the AIG companies in South Africa, said that he welcomed the positive news as it meant it was still “business as usual” for AIG’s South African operations.
“Throughout the challenges faced by AIG Inc, the AIG South Africa companies’ financial position has not been affected at all. We have retained a very strong financial position and we continue to pay claims and write new business as usual. Likewise we always retained the confidence and support of policyholders, brokers and business partners.
“The assets and capital base of AIG South Africa Limited / AIG Life South Africa Limited are protected and cannot be accessed because we are required by local law to maintain specific levels of solvency in order to maintain trading licenses.
“Our operations will not be affected in any way by the AIG Inc. announcement today.”
AIG’s local operations are highly regulated by South African insurance regulators and have maintained their world-class profitability.
“We remain fully capable of meeting our obligations to policyholders including the payment of valid claims and our business will continue.”
The solvency margin for AIG South Africa Limited is 61% compared to a statutory requirement of 15%, while the capital adequacy ratio (CAR) for AIG Life South Africa is 28 times compared with a minimum statutory requirement of 2 times.
AIG has been operating in South Africa for 46 years and today’s announcement does not change this. We foresee a continued successful operation in South Africa.
“We and the other companies in AIU (the network of non-US general insurance companies) have been built on the cumulative efforts of our employees, intermediaries and customers over decades,” said Abraham.
The AIG South Africa companies are wholly owned subsidiaries of American Underwriters Overseas Limited, a member of the Foreign General Insurance operations which are AIG’s International insurance operations.
Business as usual for AIG policyholders in SA
South Africans that have insurance policies with AIG in South Africa can rest easy despite the financial challenges of its ultimate holding company New York based AIG Inc.
This is because the local operations are financially independent from its parent.
It was announced today that AIG South Africa will remain part of the AIG Inc’s core insurance business.
George Kostopoulos, regional general counsel for AIG South Africa, said that AIG in South Africa is financially strong and is in no way affected by the financial challenges of AIG Inc.
“It’s business as usual in South Africa. There are strict regulations covering insurance companies and that means that the assets and capital base of AIG South Africa Limited / AIG Life South Africa Limited are protected.”
AIG South Africa Limited and AIG Life South Africa Limited are highly regulated companies and protected by local laws which have allowed the company to operate normally by writing new business and paying valid claims.
“We are in a very strong financial position and fully capable of meeting our obligations to policyholders,” said Kostopoulos.
The solvency margin for AIG South Africa Limited is 61% compared to a statutory requirement of 15%, while the capital adequacy ratio (CAR) for AIG Life South Africa Limited is 28 times compared with a minimum statutory requirement of 2 times
AIG has been operating in South Africa for 46 years and today’s announcement does not change this. We foresee a continued successful operation in South Africa.
The core foreign insurance operations of AIG, including the AIG South Africa companies, have an excellent historical record of generating sound results and continue to exhibit outstanding financial performance.
For the first 6 months of 2008, AIG’s international short term insurance operating income totalled $1.5 billion with net premiums of $8.1 billion.
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