(WASHINGTON - September 17, 2008) – Robert Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America, issued the following statement regarding the Federal Reserve’s announcement last night that the Federal Reserve Bank of New York will make an $85 billion short-term bridge loan for 24 months to American International Group, secured by all the assets of AIG.
“The loan is welcome news in the face of the escalating concern about the potential impact of AIG’s economic challenges, which has dominated the news for days, fueling speculation about the future of the company and debate about the public policy of a government bail-out.
“The complex corporate structure of AIG has resulted in confusion by some about the distinction between the parent company’s financial strength and the ability of its insurance businesses to meet their obligations to policyholders. The loan provides AIG with needed liquidity, averting a crisis that could have set off a cascade of repercussions across the financial markets. On the other hand, its insurance businesses are separate units or subsidiaries that are restricted from transferring assets to related entities without regulatory approval to facilitate their ability to pay claims.
“IIABA does not believe that the AIG situation will have a domino effect on the insurance industry. Independent insurance agents and brokers across the country will continue to focus on the consumer and know the state guaranty funds in all 50 states serve as important protection for policyholders. Virtually all experts agree the insurance subsidiaries of AIG are fundamentally sound. IIABA has been closely monitoring the developments on AIG and will continue to do so.”
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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