American International Group, AIG is the largest insurance company in the world at this very moment. There were much buzz about AIG due to the dented sentiment of a gloom economy prospect ahead as something like Lehman Brothers Inc being bankrupt could happen. This has really bring investors sentiment to a whole new level of realization that any company could fall.
Many people around the world who are insured by the subsidy of AIG, probably AIA would be rather worried about their insurance policies as AIG being at the brink of collapse. However, news report stated that the problem AIG is facing is not going to affect its subsidies, in particularly AIA. It would be extremely safe to assume that AIA will function normally even AIG filed for bankrupt.
What about claim? A rhetorical question that many would ask. In a event of claim when AIG got wind up. Regulator will take over to pay most traditional claims. And if the assets were used up, there will be a state fund in the case for U.S would be used to pay the policy holders in question.
So you are not a policy owner of AIG, what does it matters you? Well, AIG is the biggest in the world, that is a powerhouse in terms of financial products like insurances, funds and so on. If it goes off like what Lehman Brothers did, which is also dealing with investment business will turn the current global credit situation into a very tight state. This will hurt global economy as businesses may not be able to get loan for start up or consignment. Worst, consumer could not buy on credit and hurting retail.
It is believe that talks are underway in addressing to AIG’s current problem. We will see what happen following this. A good news such as AIG buy out could send Wall Street to rally mode.
The above are of personal opinion and not at all an inducement to trade.