AIG: Weathering the Storm for its Insurance Customers

by Pat Long

How does a company survive when it’s been part of the largest negative story on every financial page in the world over the last eight months? Not easily!

The playback in a nutshell: American International Group (AIG) is the 18th largest company in the world, providing insurance and financial products in more than 130 countries. The company is comprised of several entities that are individually capitalized. One of those took part in credit default swaps in the London Bond Insurance Market – a place that accepts premiums to cover the risk of defaults or bankruptcies. As the U.S. economy tanked, AIG suddenly owed more than predicted on these risks. It also insured mortgages so when the housing market collapsed, AIG had to pay more than statistically predicted but did not have the cash. Lastly, its reserve investments took losses in the stock market as did everyone else’s.

So while some of AIG’s parts are in extreme financial distress the majority including the personal and commercial insurance entities are still highly profitable and stable companies. So what does this mean to Eldredge & Lumpkin clients who are insured by AIG?

Here’s the Answer

AIG Private Client Group and Lexington Insurance are the entities that insure with Eldredge & Lumpkin. During the past few years, both have offered quality, competitive products in our changing Cape Cod marketplace. Lexington is an excess market firm that offers coverage for more difficult risks such as homes close to the water, secondary homes and rental properties. The Private Client Group offers coverage for homes worth more than $1 million, a market where very few insurers tread especially on Cape Cod. Both companies - subsidiaries of the AIU Holding Co. - still hold an excellent “A” financial rating.

AIU Holdings and the other property and casualty group entities recognize the drop in consumer confidence with AIG and are working very quickly to distance themselves from the AIG name - to maintain their reputations and financial standings. Their funding will never be commingled with AIG’s funds. In April, AIU Holdings started phasing towards the separation; by July 2009 the process should be complete.

We will continue to offer both companies’ products. Lexington has the flexibility to fit special circumstances at competitive pricing. The Private Client Group offers amazing coverage for clients with significant risk, in-state and out of state. Its concierge claims service is second to none, and the company works diligently at keeping pricing very competitive. Sometimes out of the fire rises the phoenix!

If any of our AIG insured customers has any questions, please call me, Pat Long, at 800 945-1840 or Email:

• Read all INSURANCE CURRENTS, Summer 2009 Articles