Business Consumer Tips - Q & A about AIG

Source: Matt Benore, Denver West Insurance Professionals, September 19, 2008

With all the news headlines regarding AIG and other financial institutions regarding their stability, we have fielded several calls from agents and clients alike. So, here at Denver West Insurance, we wanted to share information which talks about Life Insurance Policy holders and the status of their individual and business policies.

First, lets address the fact that the insurance policies are written through American General not AIG. The Life Insurance which was purchased or being considered is safe and designed to be guaranteed if Term Insurance or has a guaranteed interest rate if Permanent Insurance. This is true for all companies.

The following are sections of a Q&A article:

Q. I'm concerned about my policy. What will happen to my policy if AIG files for bankruptcy?

A.Insurance is a highly regulated industry. All insurance companies doing business in the United States are regulated by state law, and required to maintain enough capital and surplus to satisfy their obligations to their policy holders. The type and quantity of investments in which insurance companies may invest surplus capital is also limited by state law. Although various companies owned by AIG are part of a larger insurance holding company system - including the member insurers of AIG American General - each company is individually responsible for the liabilities associated with the business that it sells. In addition, each insurer is individually regulated by its state of domicile for compliance and financial solvency independent of its parent or affiliates.

This includes ongoing financial reporting to the regulator and undergoing periodic financial examination. In addition, major transactions involving insurance companies are typically required to be approved by the responsible state regulator.

In accordance with state insurance requirements and investment guidelines, AIG American General's general account is primarily invested in high quality investment grade fixed income securities (bonds). The investment objective of the general account is to optimize yield, adjusting for credit risk, liquidity and liability characteristics.

State insurance regulations are substantial and are designed to preserve and enhance the solvency of the general account and to assure that the contractual obligations to our policy holders are fulfilled. These regulations, along with the conservative investment requirements, help to safeguard client assets.

It is important to note that the guarantees related to individual AIG American General Life policies and annuity contracts are backed by the general account of the respective issuing companies. These general accounts support only the obligations of AIG American General life insurance companies and are not obligated to support any other AIG businesses.

Business Consumer Tips - Q & A about AIG , page 2 of 2

Q. What is the state guaranty fund?

A.State regulators monitor insurance companies through periodic analysis of financial statements and in-person examinations. Under insurance guaranty fund laws, states may assess insurers doing business in that state to cover certain obligations of insolvent insurance companies. State guaranty funds may help protect contract owners depending on the policy and/or its dollar amount in the event of an insurer failure.

Q.What is AIG doing to correct the current situation? Is AIG in trouble?

A.This past year has been very troubling for the financial markets and many fine companies, including AIG, have been impacted. AIG has undertaken a comprehensive review of all its businesses with a goal of improving results, reducing AIG's risk profile and protecting its capital base. We expect Chairman and CEO Robert Willumstad to report on AIG's progress later in the month.

AIG's life insurance, general insurance and retirement services businesses remain adequately capitalized and fully capable of meeting their obligations to policy holders.

AIG is actively evaluating alternatives to increase its short-term liquidity. However, the insurance policies written by AIG companies are direct obligations of its regulated insurance companies around the world. These companies are well capitalized and meet or exceed local regulatory capital requirements. And these companies continue to operate in the normal course to meet obligations to policy holders.

Recent events do not change our continuing commitment to providing our clients with world-class coverage and the highest levels of service. It is important to note that AIG's core operations remain sound and that we have strong franchises that provide valuable products and services that are much needed by American consumers. In addition, we continue to remain absolutely committed to fulfilling the long-term financial obligations to our customers. The AIG companies are fully committed to meeting the needs of their customers around the world.

In summary, your Life Insurance Policy is safe, even if or when it is bought by another insurance company. If you still feel uncomfortable, or do not trust the situation, you can look at replacing this policy however PLEASE, be aware, this may not be in your best interest due to new health issues and other insurability concerns.

Contact your agent or feel free to call upon me to answer any questions you may have and need addressed. Hang in there, we all will get through this turbulent time.

Matt Benore * mattb@benefitsblvd.com * 303-425-4466 * www.denverwestip.info