Queue forms at AIA branch at Raffles Place as policy holders

• noahnoah

  16 Sep 08, 16:36

  Queue forms at AIA branch at Raffles Place as policy holders seek answers
  By Channel NewsAsia | Posted: 16 September 2008 1542 hrs

  	Photos 1 of 1

   

  SINGAPORE: Some Singaporeans are concerned that AIG, one of the world's largest insurers could be the next financial giant to fall after Lehman Brothers.
  
  They have formed a queue at AIA Singapore's customer service centre at Raffles Place.
  
  AIG is the parent of AIA Singapore.
  
  Some long term AIA policy holders told Channel NewsAsia that they wanted to surrender their policies, even though there was a penalty for that.
  
  Some have waited for up to three hours to be attended by staff who have been overwhelmed by requests since the office opened this morning.
  
  Others said they have turned up at the AIA office to find out more.
  
  AIA Singapore has yet to comment.
  
  It has five buildings at Robinson Road, Alexandra, Changi, Tampines and Tanjong Pagar, and has over two million policies in force.
  
  Singapore's Monetary Authority (MAS) has said that AIA Singapore, as a registered insurer, is required to maintain sufficient financial resources to meet all its liabilities to policyholders at all times.
  
  It added that AIA Singapore currently meets these regulatory requirements.
  
  MAS said it has the legislative power to establish the policy owners' protection fund, under the Insurance Act.
  
  However, it said that it is unable to comment on parent company AIG, which is the "ultimate parent" of AIA as it is not regulated by MAS.
  

   

• the Bear

  16 Sep 08, 16:55

  yeah.. i heard from people around there saying got lines...

  thing is, no matter what the SC asswipes say, in order to do business here, they have to maintain enough resources to meet the policyholders here...

  herein is where we see how strong MAS is... if they were enforcing the regulations properly, AIA will be able to handle this run..

  if MAS doesn't, then everything is shakened as people wonder and confidence is lost..

  but somehow, i think MAS run a tight ship.. the people who insured with AIA needn't worry..

• FireIce

  16 Sep 08, 16:57

  chill lah.

• RedizAlertz

  16 Sep 08, 17:02

  No wonder I saw so many pple over there when I passed by after lunch, I thot wat leh..

• maurizio13

  16 Sep 08, 17:11

   

  Hehehe.......

  Bank Run!!!!

  or is it......

  Insurance Run!!!

   

   

• the Bear

  16 Sep 08, 17:14

  Originally posted by maurizio13:

   

  Hehehe.......

  Bank Run!!!!

  or is it......

  Insurance Run!!!

   

   

  
  and why the hell are you so happy about it?

• Master -_-

  16 Sep 08, 17:18

  regulations here are so stringent..no such things will ever happen......

• Master -_-

  16 Sep 08, 17:19

  Originally posted by the Bear:

  
  and why the hell are you so happy about it?

  
  he found another hair la

• maurizio13

  16 Sep 08, 17:19

  Originally posted by the Bear:

  yeah.. i heard from people around there saying got lines...

  thing is, no matter what the SC asswipes say, in order to do business here, they have to maintain enough resources to meet the policyholders here...

  herein is where we see how strong MAS is... if they were enforcing the regulations properly, AIA will be able to handle this run..

  if MAS doesn't, then everything is shakened as people wonder and confidence is lost..

  but somehow, i think MAS run a tight ship.. the people who insured with AIA needn't worry..

   

  I don't think any bank or financial institution is able to handle a bank run without the central bank stepping in to provide funds for liquidity.

  Banks operate under capital adequacy ratio (CAR), that is if they have a deposit of $100, they are required to maintain a percentage of say 10% and they can invest the rest of the 90% as they desire.

  They plough all the 90% into investments or loans which have long maturity. In any event that all investors or depositors wish to close account and withdraw everything, they might need to either liquidate their investments on a forced sale basis, which might be lower than their final value, or seek loans from central bank.

   

• maurizio13

  16 Sep 08, 17:22

  Originally posted by the Bear:

  
  and why the hell are you so happy about it?

  
  Happy because I don't have a policy.

   

• SPLIT SECOND

  16 Sep 08, 17:55

  tsomething huge happened:Monday's Wall Street bloodbath

   

• hmsg

  16 Sep 08, 18:51

  everyone is waiting to see if US market continues to drop significantly tonight. If yes, tomorrow's reaction should be worst.... STI today quite ok.... but that's because yesterday already dropped some...

• Xcert

  16 Sep 08, 18:57

  Originally posted by Master -_-:

  regulations here are so stringent..no such things will ever happen......

  
  remember NKF and Ren Ci?

• maurizio13

  16 Sep 08, 19:01

  A Race for Cash at A.I.G. as Ratings Are Downgraded

  By MARY WILLIAMS WALSH and MICHAEL J. de la MERCED

   

  Published: September 15, 2008

  Major credit ratings agencies downgraded the American International Group late Monday, worsening its financial health, as Federal Reserve officials and two leading investment banks were in urgent talks to put together a $75 billion line of credit to stave off a crisis at the company.

  The credit downgrades are likely to force the company to turn over billions of dollars in collateral to its derivatives trading partners.

  Without the financing, which was being arranged by Goldman Sachs and JPMorgan Chase in talks with the Federal Reserve officials, A.I.G. might be forced to declare bankruptcy, according to two people briefed on the situation.

  The talks, which began last week and continued through the weekend, added to the sense of agitation in the stock market on Monday, as investors grappled with the implications of the bankruptcy of Lehman Brothers, which, like A.I.G., was a large counterparty to derivatives contracts held by countless financial institutions.

  Shares in A.I.G. tumbled more than 60 percent on Monday morning as concerns grew that the firm lacked capital to withstand cuts to its debt rating, which were borne out later in the day. The company’s potential write-offs are mounting and may reach $60 billion to $70 billion, according to two people briefed on the situation.

  Most of A.I.G.’s businesses are healthy, but its troubles grew from one unit that dealt in complex debt securities and derivatives and now threatens to drain cash more quickly than the financing package can be assembled.

  The day started off with news that A.I.G. had requested a $40 billion bridge loan from the Fed, a request that was rebuffed, and ended with the word that its need had soared to $75 billion. The firm suffered several credit-rating downgrades Monday evening, including cuts by Standard & Poor’s and Moody’s.

  The complex discussions, continuing into the night as a deal was sought before United States markets open on Tuesday, involved New York state regulators, federal regulators, private equity firms and Wall Street banks that rely on A.I.G.’s ability to honor its derivatives contracts, as they do with Lehman Brothers.

  “It’s not just the failure of one company,” said Julie A. Grandstaff, vice president and managing director of StanCorp Investment Advisers. “It’s the ripple effect of the disappearance of counterparties” that was spurring urgent efforts to bolster A.I.G.

  A large counterparty to derivatives contracts has not declared bankruptcy since the market grew to such enormous size, so Lehman will be a test. Financial officials fear another failure of a big counterparty could start a chain reaction.

  The need to find fresh money for A.I.G. is bringing new layers of complexity to the credit crisis. As an insurance concern, A.I.G. has wholly different regulators and capital requirements than the banks and Wall Street firms that have suffered most of the huge losses so far. One person briefed on the matter said that potential lenders doubted that the facility could come together without the Fed’s backing.

  A.I.G. itself has had three chief executives in the last three and a half years, and one person briefed on Monday’s discussions said its officials seemed uncertain about how to proceed. The Fed was not able to provide the $40 billion bridge loan because it oversees banks, not insurers.

  The talks about backing up A.I.G. began last week, when the company approached regulators, saying it was concerned that if a deal could not be put together to save Lehman, A.I.G.’s own future would be in doubt. A.I.G., through its financial products unit in London, has exposure to the same mortgage-linked debt securities that brought about the downfall of Lehman.

  The talks between A.I.G. and its regulators led to the announcement at midday by Gov. David A. Paterson of New York that the state would allow A.I.G. to borrow $20 billion from its own subsidiaries, to help bolster its capital in the face of potentially disastrous credit downgrades.

  Mr. Paterson said he had authorized the state insurance superintendent, Eric R. Dinallo, to include the $20 billion asset transfer in the broader plan being worked out at the New York Fed.

  Normally state insurance regulations would prevent a holding company like A.I.G. from pulling assets out of its subsidiaries, which are insurance companies that need sufficient liquid resources to pay their claims.

  But Mr. Paterson said the situation was dire.

  “I hope you’re aware of the risks if we don’t act,” he told journalists at a midday news conference. “It is a systemic problem.”

  Mr. Paterson said A.I.G. was “financially sound,” but was unable to tap the liquid assets in its subsidiaries because of regulatory constraints.

  He stressed that New York taxpayers were not on the hook for the $20 billion. “No taxpayer dollars are involved,” he said.

  A.I.G. is the parent of dozens of major insurance companies, and Mr. Paterson said it was possible for them to lend money to their corporate parent without putting their policyholders at risk, because the subsidiaries would receive some form of collateral. He said the collateral would consist of “illiquid assets,” but did not describe them.

  Insurance sources said some of the money could be produced by exchanging assets between the holdings of A.I.G.’s life insurance subsidiaries and its property and casualty subsidiaries, which have different capital requirements. For instance, an A.I.G. property insurer might buy stock from an A.I.G. life insurer’s portfolio, paying for them with high-quality bonds from its own portfolio.

  Life insurers have tighter capital requirements than property insurers, so replacing stock with bonds would strengthen the life insurer’s capital structure, allowing it to send the surplus to the holding company.

  Such a transfer would leave the life insurance company with investment assets that would produce less income, so the insurer would probably have to make up the difference by charging more for its life insurance policies, annuities and other products.

  Spokesmen for A.I.G. and the New York State Insurance Department said they could not provide any details on which of A.I.G.’s insurance companies would be involved in the asset transfers, because the plan was not yet final.

  The governor’s announcement appeared to help arrest the decline in A.I.G.’s stock. Trading below $4 shortly before noon, the shares briefly recovered to about $6, but ended down almost 61 percent at $4.76 from their Friday close.

  Ratings agencies had threatened to downgrade the insurance giant’s credit rating by Monday morning, a step that could allow counterparties to A.I.G.’s swap contracts to require A.I.G. to post collateral of up to $13.3 billion. The urgency of the talks grew by late Monday as A.M. Best Company, a credit rating organization specialized in insurance and health care companies, downgraded the credit of A.I.G. and several of its major subsidiaries. Fitch Ratings also downgraded A.I.G.’s credit Monday evening.

  Standard & Poor’s downgraded its long-term and short-term counterparty ratings of A.I.G.. and Moody’s cut its rating of A.I.G.’s senior debt, to levels requiring A.I.G. to post collateral of up to $10.5 billion.

  People briefed on the matter said that if JPMorgan and Goldman Sachs were able to raise a $75 billion credit line by Tuesday, it could avert an escalating series of collateral calls. But it was unclear whether they could put together such a complicated package in time.

  A.I.G. has also considered sales of virtually all of its business assets, but conducting such sales quickly would be hard.

  During the weekend, A.I.G. had been negotiating for a capital infusion from three private equity firms, people briefed on the matter said. But A.I.G. rejected an offer from J. C. Flowers & Company to buy $8 billion in preferred shares, because the bid included an option to buy the rest of the company at a steep discount.

  Two other buyout firms, Kohlberg Kravis Roberts and the Texas Pacific Group, withdrew their offers to buy preferred shares as the Fed made clear that it would not provide any sort of backstop.

  But Maurice R. Greenberg, the visionary leader who built A.I.G. but was removed during an accounting scandal in 2005, has offered to help with any restructuring. Mr. Greenberg and his lawyers asked on Saturday if he could play a role in overhauling A.I.G. The deadpan response, according to a person close to the company, was: If you are willing to make a multimillion-dollar equity investment, we are happy to talk.

  Mr. Greenberg has seen the value of his holdings plummet as A.I.G. shares have sunk. He holds about 39 million A.I.G. shares directly and an additional 243 million through his private equity firm, Starr International. The shares were worth about $15.8 billion at the beginning of this year, but just $1.3 billion as of Monday.

  Source: New York Times

   

• maurizio13

  16 Sep 08, 19:03

   

  Without the help from another source, the collapse of AIG is imminent.

  Liquidity will kill them.

   

• maurizio13

  16 Sep 08, 19:04

   

  If the Feds help them, they will be ballooning their own deficit.

  Hehehe.....

  Every which way but lose.

   

• maurizio13

  16 Sep 08, 19:06

  An AIG Accident Could Dwarf Lehman's

  By RANDALL W. FORSYTH  | MORE ARTICLES BY AUTHOR
  

  Downgrades could trigger margin calls as insurer seeks a massive cash infusion.

  COULD THIS BE THE BIG ONE?

  Scarcely a day after the stunning news of the bankruptcy filing by Lehman Brothers and takeover of Merrill Lynch by Bank of America, arguably an even greater threat to global financial stability is being posed by American International Group (ticker: AIG).

  The nation's largest insurer by assets was seeking a financial lifeline after its credit rating was lowered by Fitch Ratings, Standard & Poor's and Moody's Investors, an event that could force AIG to, in effect, meet a $14 billion margin call on credit-default swaps it has written.

  The Federal Reserve was working with JPMorgan Chase and Goldman Sachs to arrange a massive loan package of up to $75 billion to stave off a severe liquidity crisis at AIG, according to published reports. But reflecting the parlous situation, its shares plunged 61% Monday while the cost of insuring AIG debt soared to astronomical levels.

  "The move highlights the circular dilemma facing financials with capital concerns," writes Bank of America credit analyst Jeffrey Rosenberg. "The lack of capital-raising prompts a downgrade, further worsening the credit risk of the company, further constraining the capital-raising potential."

  The downward spiral also extends to the equity side. The sliding stock price makes the cost of raising equity capital and the potential dilution of current shareholders prohibitive, while the inability to raise capital further pressures the stock price.

  The downgrades came despite the New York State Department of Insurance freeing $20 billion from AIG subsidiaries to bolster the parent's liquidity. Regulators usually oppose such moves but New York Governor David Paterson called the situation "dire."

  But the Fed reportedly turned down a request for a $40 billion loan to AIG, instead sought JPMorgan and Goldman to arrange a $75 billion financing package. Whether such a huge loan could be arranged virtually overnight was far from certain.

  That's reflected in the draconian price being exacted to insure AIG debt in the derivatives market. The all-in cost virtually doubled, to a 1722 basis points, an increase of 820 basis points, according to Tim Backshall, chief strategist at Credit Derivatives Research. That would normally translate to a cost of $1.722 million annually to insure $10 million of AIG debt for five years. But, because the market fears an accident sooner, AIG CDS require an upfront payment -- some $3.05 million -- plus $500,000 annually.

  That reflects what AIG is up against. While its credit ratings remain well within investment-grade range, the downgrades could result in AIG's counterparties demanding an additional $14.5 billion in collateral -- in effect, a margin call, according to an SEC filing made last month, according to published reports.

  What would happen in that event could be catastrophic. A bankruptcy filing by AIG would have more far reaching consequences than Lehman's. Yet the Fed and the Treasury have drawn a line in the sand against further bailouts after Fannie Mae and Freddie Mac and Bear Stearns last March.

  That leaves the fate of AIG in the private sector's hands, at least nominally.

  The Fed has further expanded the range of assets against which it will lend through its Primary Dealer Credit Facility, its vehicle for lending to investment banks. Even equities are eligible collateral as opposed to only investment-grade debt securities previously. The Fed also will swap Treasuries for all investment-grade debt, not just triple-A quality securities.

  Could banks somehow use such facilities to advance money to AIG? Doesn't sound quite kosher but so many things have been contrived since the credit crisis began that who knows what regulators might try to do through the back door now that they've closed off a front-door bailout.

  Coming on the heels of a 4% plunge in U.S. stocks Monday, the worst since the Sept. 11, 2001, terrorist attacks, and even steeper declines in Asia early Tuesday, it's unlikely that the tag team of Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke would stand idly aside if AIG is seen to bear out Warren Buffett's characterization of derivatives as "weapons of financial mass destruction."

   

  http://online.barrons.com/article/SB122151687346838769.html?mod=googlenews_barrons

• trendz

  16 Sep 08, 20:32

  mortgage crunch so jialat.

• lionnoisy

  17 Sep 08, 08:37

  Before u cancel the Policy,pl consider the followings:

  Are u suitable for new insurance policy----insurability.

  Any insurance co. will look at u

  economic-----are u a bankcrupt?No job or the pay very low.

  .....................Coverage tie up with income.
  

  social----------have u been jailed?
  

  health-----physcial and mental

  although i have confidence on Singapore AIA,i dunt advice u

  any actions or non--actions.

  I heard nowaday is not easy to get policy approved.

• nehpyh

  17 Sep 08, 08:43

  Qs at AIG?? What peeps gonna do?? Cancel their premiums and get less than interests back? Umm..maybe that will acutally save AIG!!! LoL

• Dr Who

  17 Sep 08, 08:45

  Are you AiA insurance salesman ah?

  please declare your vested interests, if any.....

• maurizio13

  17 Sep 08, 09:41

   

  Catastrophe Averted. Thanks to the Feds. 

  AP

  
  Government announces $85 billion loan to save AIG
  Tuesday September 16, 9:28 pm ET

  Government announces $85 billion loan to rescue AIG to stave off further financial turmoil

   

  WASHINGTON (AP) -- In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

  It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.

  "The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."

  Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."

  "I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.

  The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.

  Earlier, Fed chairman Bernanke and Paulson met with Sen. Christopher Dodd, D-Conn., Majority Leader Harry Reid, D-Nev., and House Republican leader John Boehner of Ohio, to brief them on the government's option.

  "At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters. "The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets."

  On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent -- and another 45 percent after hours. Still, no deal emerged.

  The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

  The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance -- such as banks and other financial companies -- would have found themselves without protection against losses on the debt they hold.

  "It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."

  New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."

   

  http://biz.yahoo.com/ap/080916/aig.html

   

• lionnoisy

  17 Sep 08, 09:54

  Before u cancel the Policy,pl consider the followings:

  Are u suitable for new insurance policy----insurability.

  Any insurance co. will look at u

  economic-----are u a bankcrupt?No job or the pay very low.

  .....................Coverage tie up with income.
  

  social----------have u been jailed?
  

  health-----physcial and mental

  although i have confidence on Singapore AIA,i dunt advice u

  any actions or non--actions.

  I heard nowaday is not easy to get policy approved.

   

  If u really want to terminate,pl get new one approved first

  Every time u cross the road,u will look right,left and right again

  before u cross the road.Every time,every day.Correct?

  Like crossing a road,u have to get insurance coverage

  EVERY DAY!!

  One day and one week without insurance coverage is too long.

  Dunt leave mess to your family.Leave then somethings!!

• dragg

  17 Sep 08, 09:54

  i wonder if anyone surrendered his or her policy.  must regret terribly now.

   

• maurizio13

  17 Sep 08, 10:03

   

  Once again, I have problems understanding what points our dear lionnoisy is trying to put forth.