Well, having a few AIA policies of my own, I am reading with interest about the developments of AIG and one of its subsidiary, AIA.
Latest ST news have claimed that AIG would be 'bailed out' of this situation through the US govt being given an 80% stake, which would be eventually unwound through the orderly sales of AIG's key assets and subsidiaries - AIA being one of them. I wonder if this meant that AIA would eventually be sold off? I wish MAS or AIA could clarify this matter rather than just assure us that our "money is safe" and "sufficient to meet ... obligations".
It didn't really help to see that their CEO, Mark O'Dell leave at this most unopportune time. However one who understands executive functions in this day and age would know that the CEO (together with the CFO) is the one who would have the most comprehensive picture of the financial situation of his company. And hearing that O'Dell "had been planning for some time" his move from AIA to a rival firm was a bit disconcerting to say. Did he know something that others didn't?
The immediate impact would be the one that's felt by the AIA and AIG agents most - their source (and with MAS' regulations towards life insurance, it'd likely their only source) of income cut off at its source (who's going to buy AIA insurance now?). From what I last remembered, AIA has more than 5000 agents in Singapore - assuming 20% are MDRT agents, earning approx $60k worth of commissions per annum, it would result in a net drop of $6M income earnings in Singapore's books. I can see why the govt should be concerned.
I wonder how many AIA policyholders have whole life policies (that are non investment-linked) which derive their bonuses from profits 'generated' through organisational efficiencies and lower claims - it's likely we might not see any non-guaranteed bonuses in the foreseeable future. It'd be a double whammy for those who'd terminated their ILPs because of what was published in ST a couple of years back - they would be gnashing their teeth as well if they realised that ILPs would eventually stand to gain as the economy recovers as the underlying stocks bought increase in value.
I'll definitely be watching the developments unfold - but I doubt I'd be cancelling my policies anytime - But who knows, should the other insurance companies face the same issue (Prudential, Manulife, Aviva, Great Eastern, NTUC etc), you just might catch me in a queue ;)
For those who're interested in knowing more about the Singapore's insurance industry, do ask your agent about M5 and M9 modules - these are required certifications needed to become an insurance agent.
