As an employee of ALICO, which is a subsidiary of AIG, I will focus the attention of this letter on the implications of the recent negative events in the financial services industry as it relates to ALICO for the sole purpose of ALICO’s current and future policyholders.
AIG is a company with over $1trillion in assets and a substantial equity; however the company experienced short-term cash flow problems, which was alleviated by the US$85 billion secured credit facility from the US Government.
Although AIG faced short-term liquidity pressures, we differ from other financial institutions that have been under pressure in that we have strong, well-positioned businesses in diverse markets around the world and a deep asset base.
While AIG is the parent holding company pf ALICO, ALICO is a separate, stand-alone regulated insurance, company with assets in excess of US$100billion. ALICO’s solvency and liquidity remain strong and ALICO currently holds an S&P financial strength rating of ‘A+’.
Each ALICO operation is locally managed, and regularly inspected by government authorities, whose scope and responsibility is to protect and observe the interest of the policy holders.
Insurance policies written by ALICO branches and subsidiaries are direct obligations of our locally regulated insurance companies, and AIG directly. The liabilities and obligations derived from the policies ALICO sells are backed by assets, thus complying with and, in many cases, exceeding local solvency requirements. ALICO operates in more than 55 countries around the world including Japan, Europe the Middle East ,South Asia, Latin America and the Caribbean ALICO trades under different names in various jurisdictions including ALICO, AIG Life, Interamericana Vida and ALGICO.
ALICO’s branches and subsidiaries are subject to strict regulatory requirements in each country of operation.
Mention must be made of the recent statement made by the region’s MD/CEO in stating that ALICO, being well capitalised and financially solid, has 90 per cent of its investment portfolio based in Trinidad and Tobago and other regional territories and 10 per cent in the European market.
Of its local investments, 80 per cent are in Government securities and 20 per cent in regional real estate and bank deposits. He went on to say that ALICO has no AIG stock shares in its investment portfolio and ALICO’s ability to pay claims were undiminished and it would continue to protect its policyholders and fulfil obligations.
This statement re-enforces the point that the subsidiaries – like ALICO – are separate entities that handle their own investment portfolio worldwide and is doing so meet or exceed local regulatory capital requirements.
Unit Manager, ALICO Cayman