Dinallo outlined the steps that the New York State Insurance Department — and state insurance regulators from across the nation — have taken to protect policyholders and ensure the solvency of the American International Group (AIG) insurance subsidiaries.
“It’s important for everyone, and especially policyholders in AIG insurance companies, to understand that the insurance companies, which are regulated by New York and other states, are solvent and have the funds to pay any policyholder claims,” Dinallo said. “AIG’s problems came from its parent company and from its non-insurance operations, which are not regulated by New York or any other state.”
Dinallo clarified that AIG owns 71 U.S.-based insurance companies and 176 other financial services companies, including non-U.S. insurers. Only AIG’s U.S. insurance subsidiaries are regulated by state insurance regulators.
AIG’s holding company, by its own choice, is regulated by the U.S. Office of Thrift Supervision, a federal agency charged with overseeing savings and loan associations.
“Insurance regulators from every state — and especially those regulators in New York and Pennsylvania, who oversee a large number of AIG insurance subsidiaries — have been involved in every step of resolving AIG’s holding company problems,” said National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger. “Our primary principle throughout the effort to assist AIG has been to protect insurance company policyholders and to stabilize the insurance marketplace.”
Praeger’s comments were submitted via a letter addressed to Committee Chairman Henry Waxman (D-Calif.) and Ranking Member Tom Davis (R-Va.). Praeger’s letter was submitted to the record and circulated to members of the House Oversight Committee and the House Financial Services Committee, among others.
“Some insurance lobbyists hope to politicize and mislead policymakers by suggesting AIG’s problems are a result of state insurance supervision, and could have been averted by federal oversight,” Praeger said. “On the contrary, conservative state regulation ensured that while the federally regulated holding company was failing, the insurance businesses were appropriately capitalized and the interests of policyholders were placed ahead of shareholders.”