DAILY NEWS Nov 12, 2012 3:17 PM - 1 comment

AIG rebrands most P&C insurance business

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2012-11-12

American International Group Inc. of New York City, which was bailed out during the financial crisis of 2008 and has since paid back the U.S. government, is using AIG again as its brand for property & casualty insurance.

Until Monday, AIG was offering P&C insurance under the Chartis brand.

AIG

"Other brands in the AIG family, including VALIC, Lexington Insurance, American General, SunAmerica, and Western National, will continue unchanged," AIG stated in a press release Monday.

The announcement comes four years after the financial crisis of September 2008, when the Federal Reserve Bank of New York was authorized to provide up to $85 billion in bailout funds for AIG. The government’s financial support was restructured on several occasions and this led to the U.S. government owning a majority interest in the company.

The Fed's assistance to AIG was terminated in January, 2011 and in September of this year, AIG announced a share buyback that is expected to reduce the U.S. government's ownership stake in AIG from 53.4% to $15.3%.

On Nov. 1, AIG released financial results for the period ending Sept. 30, recording net income of US$7.396 billion for the first nine months of 2012, compared to a loss of US$1.669 billion during the first nine months of 2011.

During the third quarter, AIG recorded net income of $1.856 billion and net premiums earned of $8.752 billion.

"The total authorized U.S. government assistance to AIG of $182 billion has been fully repaid, and the Federal Reserve and United States Department of the Treasury have to date received a combined positive return of approximately $15.9 billion on their investments in the company," AIG stated in a press release Nov. 12.

In September 2008, AIG had encountered losses on its mortgage-related investments and collateral calls on credit default swaps.

"By mid-September 2008, these liquidity pressures brought the firm to the brink of collapse," according to a backgrounder published on the Federal Reserve Bank of New York website. "On September 15, 2008, downgrades by certain credit rating agencies triggered CDS-related collateral calls that the company could not meet."

U.S. federal agencies intervened to save the firm due to its extensive reach. At the time it had more than 30 million customers, six million customers with retirement plans or accounts and was the largest issuer of life and health insurance and fixed annuities.

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