South Africans that have insurance policies with AIG in South Africa can rest easy despite the financial challenges of its ultimate holding company New York based AIG Inc.
This is because the local operations are financially independent from its parent.
It was announced today that AIG South Africa will remain part of the AIG Inc's core insurance business.
George Kostopoulos, regional general counsel for AIG South Africa, said that AIG in South Africa is financially strong and is in no way affected by the financial challenges of AIG Inc.
"It's business as usual in South Africa. There are strict regulations covering insurance companies and that means that the assets and capital base of AIG South Africa Limited / AIG Life South Africa Limited are protected."
AIG South Africa Limited and AIG Life South Africa Limited are highly regulated companies and protected by local laws which have allowed the company to operate normally by writing new business and paying valid claims.
"We are in a very strong financial position and fully capable of meeting our obligations to policyholders," said Kostopoulos.
The solvency margin for AIG South Africa Limited is 61% compared to a statutory requirement of 15%, while the capital adequacy ratio (CAR) for AIG Life South Africa Limited is 28 times compared with a minimum statutory requirement of 2 times.
AIG has been operating in South Africa for 46 years and today's announcement does not change this. We foresee a continued successful operation in South Africa. The core foreign insurance operations of AIG, including the AIG South Africa companies, have an excellent historical record of generating sound results and continue to exhibit outstanding financial performance.
For the first 6 months of 2008, AIG's international short term insurance operating income totalled $1.5 billion with net premiums of $8.1 billion.