The growth prospects of the American Insurance Group (AI G), which went through turbulent times and was bailed by the US government, looks stronger despite the challenges faced by the parent company, a top company official has said.
Peter Flint, the newly-appointed regional president for Africa, reassured clients and other stakeholders that all the firm’s insurance operations were ‘solidly profitable and will be business as usual”.
Flint, who until his new posting was in charge of AIG operations in China, has replaced Joost Vink who will head operations in Germany. He made the remarks at a reception held in his honour, which also doubled as farewell party for the outgoing Vink.
Flint stated that his appointment reaffirmed the growing importance of insurance operations in Kenya, South Africa and Uganda.
Latest reports Thursday indicated that the American Federal Reserve Wednesday agreed to loan the insurance giant up to US$ 37.8 billion, in addition to the one made to the troubled company in September.
Under the new programme, the Federal Reserve Bank of New York will borrow up to US$ 37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. The securities were previously lent by AIG’s insurance company subsidiaries to third parties.
The arrangement will help AIG secure funds on an as-needed basis, the New York-based insurer said in a statement. As of Monday, about US$ 37.2 billion of securities were available for loans under AIG’s securities lending programme.
On the brink of failure last month, AIG was bailed out when the government offered it an US$ 85 billion loan during the ongoing credit crisis that saw Lehman Brothers Holdings Inc. file for bankruptcy protection and the sale of Merrill Lynch & Co. to Bank of America Corp.
In return for the two-year loan, the government received warrants to purchase up to 79.9% of AIG.
As of 30 September, AIG had drawn US$ 61 billion on the credit facility, of which about US$ 54 billion had gone toward its securities lending and AIG’s financial products area. The rest of the money will be for other liquidity needs amid an “unprecedented” freezing of credit markets, Chief Executive Edward Liddy said last week.
In Nairobi, AIG Kenya Managing Director Japh Olende said that Kenya insurance operated in a reassuringly protected environment regulated by the newly- formed Insurance Regulatory Authority (IRA) – hence it offered the necessary protection to policyholders.
“We are adequately capitalized and fully capable of meeting AIG Kenya’s obligations to policyholders including payment of claims.
The company’s local solvency margin and capital continue to be healthy with sufficient surplus capital,” he said. He reminded the audience that reinsurance treaty facilities with the parent company’s heavily regulated insurance subsidiaries continue to remain undiminished.
“Indeed, we have witnessed turbulent times in our financial markets, one thing has not changed – insurance is a promise. We stand behind that promise. And we stand behind our clients as we have for the last 37 years in Kenya and nearly 80 years in 80 countries around the globe,” he said. Panapress.