AIG News Roundup

The Situation

On September 17, the Federal government stepped in with a loan to bailout AIG.  The government's initial plan was a two-year, $85 billion-dollar loan, secured by AIG's assets.   

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AIG's CEO, Edward Liddy, Speaks Out About AIG's Future
During a conference call on October 3, Liddy talked about the current and future state of AIG.  As of September 30, AIG has drawn $61 billion of the $85 billion credit facility provided by the federal government.  Liddy would not rule out the possibility of going to the Fed for more money, but said the primary focus for now is the sale of assets and staying within the limits of the loan agreement.  While the Private Client Group, a program tailored for wealthy clients, and AIG's other core insurance components will not be sold off, AIG's personal lines insurance unit and the rest of the company are up for sale if the price is right.

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What This Could Mean to Agents

Errors & Omissions Policies - Insolvency Exclusions

Errors & Omissions policies typically include Insolvency Exclusions that exclude coverage for claims arising from placing business with carriers meeting certain criteria as described in the exclusion.

• Since there is different exclusionary language contained in various E&O policies, agents are encouraged read your E&O policy, particularly the Insolvency Exclusion section, and direct any questions to your agent or carrier.  

• Many E&O policy Insolvency Exclusions are triggered by a carrier’s rating from the A.M. Best Company, a full-service rating organization whose ratings and analysis assess the financial strength and creditworthiness of risk-bearing entities and investment vehicles. It is recommended that, in addition to becoming familiar with the Insolvency Exclusion section of their E&O policy, agents should also check the A.M. Best rating of all of their carriers at least annually and more often if they are aware of potential problems with a particular carrier. A link to the A.M. Best Web site is available in the box to the right.

• If your E&O insurance is through PIA, feel free to call at any time to discuss your policy and any language contained therein. Contact the PIA Insurance and Benefits Department at (800) 555-1742.