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The National Association of Insurance Commissioners announced formation of a working group on the AIG crisis that will coordinate with federal regulators as needed, NAIC President Sandy Praeger said. The group is chaired by New York State Insurance Superintendent Eric Dinallo; Pennsylvania Insurance Commissioner Joel Ario will serve as vice chairman.
Under the agreement with the Federal Reserve, AIG is expected to sell the business and assets of its profitable state-domiciled subsidiaries in order to generate new revenue.
"AIG?s non-insurance parent company is federally regulated and, therefore, not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries," Praeger, the Kansas insurance commissioner, said in a statement. "The insurance subsidiaries are solvent and able to pay their obligations."
In the "unlikely" event of solvency and liquidity problems with these enterprises, state guaranty funds could kick in, Praeger said. The solvency framework and safety net for policyholders is uniform in each state, under the NAIC's Financial Regulation and Accreditation Program.
Commenting on the AIG companies licensed in his state, California Insurance Commissioner Steve Poizner said he has made monitoring the AIG situation his department's top priority.
"The federal action offers maximum protection for AIG insurance customers in California and elsewhere. The loan does not create any lien obligations on any of the AIG insurance assets, ensuring that their claims-paying capacity remains strong," Poizner said in a statement. "Even prior to action taken by the Federal government, the companies owned by AIG had the risk-based capital required to operate in the California market."
Florida Insurance Commissioner Kevin McCarty, whose state also has a significant number of AIG subsidiaries, cautioned policyholders not to act rashly.
"It is important that policyholders continue to pay their premiums to ensure that their coverage does not lapse. I assure you that, if it should become necessary, we will immediately intervene if we feel that any one of the AIG companies operating in Florida will be unable to pay its claims and fulfill the promises made to its policyholders," McCarty said in a statement.
(By Sean P. Carr, senior associate editor, BestWeek: Sean.Carr@ambest.com)
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