AIG's AIA unit in SIngapore in Trouble?

AIA Singapore Update. Is AIG's Singapore life insurance unit AIA in trouble. On Sept 19, the general manager of AIA resigned. Despite reassurance from both MAS and AIA itself that the insurer is able to meet its obligations to policy holders, people continue to throng the office to terminate their policies

Read below for a letter by AIG's chairman:

From Mr Maurice (“Hank”) Greenberg.

Sir, AIG needs a bridge loan, not a bail-out. The company faces a liquidity crisis, not a solvency problem. Its core insurance operations, both in the US and abroad, are financially sound, and it can raise more than $20bn though orderly asset sales. For these reasons, a bridge loan – from the federal government if sufficient private capital is not forthcoming – will not mean a bail-out. A temporary bridge loan will prevent further rating agency downgrades, which would require AIG to post billions of dollars in additional collateral, and which would likely prove fatal.

It is true I spent most of my adult life building AIG, but that is not why I think federal assistance – should it be necessary – is appropriate. A federal bridge loan is appropriate because it is in our national interest to save AIG. The company operates in approximately 130 countries, and has more than 100,000 employees. It provides credit protection to tens of thousands of financial institutions and other companies around the world. Its failure would pose systemic risk to the US and international financial systems.

AIG is not an ordinary company. It has opened markets all over the world and, for more than three decades, stood at the vanguard of the liberalisation of the global trade in services. Its stock is owned directly or indirectly by millions of Americans. And it has contributed significantly to US gross domestic product directly and indirectly over the four decades of its existence.

But all that is not why it should be saved. AIG has $1,000bn in assets. It can (and always has) serviced its debt. With the right leadership, it will continue to do so.

How did AIG get to this point? Clearly, risk management controls disappeared or were weakened. In recent years, AIG grew for the sake of growth, without regard for profitability, and its financial products businesses spun out of control.

But figuring out the mistakes that were made should come later. Action is needed now: AIG needs immediate help, because the threat to our financial system is real. For that reason, if private capital cannot rescue AIG, a temporary federal bridge loan – not a federal bail-out – is in order.

Maurice (“Hank”) Greenberg,
Chairman and Chief Executive,
C.V. Starr & Co,
Chairman and Chief Executive of American International Group,1967-2005