AIG Life ‘Tries to Calm Fears’ As Mother Ship Sinks

The Jakarta Globe, Janeman Latul, March 4, 2009 

AIG Life Indonesia, the local insurance arm of US-based insurer American Insurance Group, formerly the world’s largest insurance company, said on Tuesday that it was still growing and was so far unaffected by its mother company, which suffered the biggest loss in corporate history on Monday. 

The US insurance giant reported a net loss of $61.7 billion dollars in the fourth quarter of 2008, which takes its annual net to almost $100 billion in the red. 

The loss at AIG, which was credited to its exposure to derivative products, including subprime mortgage assets, is probably the biggest quarterly loss in corporate history and possibly the largest annual loss ever suffered by a company. 

Since the company made the announcement late on Monday night local time, the US government has intervened and promised to bail out the company with a $30 billion guarantee on assets, classifying it as another firm that is too big to fail. This was the fourth time the government has backstopped AIG, bringing its total bailout to $180 billion. 

In a press release on Tuesday, Robert W. Bush, the president director and chief executive of AIG Life Indonesia, stressed AIG Indonesia’s prospects were still strong, despite the problems of its parent company. 

“The global markets have experienced major turmoil and it is impossible to be insulated from its impact,” Bush said in the release. “However as always, we continue to review our business strategy to ensure that we are a more nimble, efficient and growth-oriented company for the long term. This will allow us to lay the building blocks for a more exciting future that will benefit generations of shareholders, customers, agents and employees.” 

Indonesia’s AIG reported that its unaudited financial data submitted to the Capital Market and Financial Institution Supervisory Agency, or Bapepam-LK, saw it post 25 percent growth in first-year premiums in 2008. 

However analysts doubted the company’s local prospects would be so good this year. 

“I think what AIG Indonesia is trying to do is to calm the growing fear of its investors,” said Yanuar Rizki, a capital market observer. “The global crisis, which continues to deepen in Indonesia, may cause more trouble to AIG in the coming months because many people are going to be laid off and will try to cash out their claims.”