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• American General Life Insurance Company Update
  

  There has been considerable concern across the country over the past several weeks regarding the stability of our nation's financial system. We have seen several large financial institutions either collapse, on the verge of collapse, saved by the federal government or acquired by other companies. One such company, American International Group (AIG), is the parent company of one of our nation's largest term life insurance companies, American General Life Insurance Company.
  
  Last month, we  in detail about the financial difficulties faced by AIG. Today, we'd like to provide an update and explain why American General Life is still an excellent company and a good choice for your term life insurance needs. Detailed information can be found in this fact sheet released by American General Life.
  
  Surely you are aware of the federal government's decision to provide a line of credit up to $85 billion to AIG. In return, the government will acquire the right to receive up to a 79.9% stake in the company through stock options. This life-line extended by the government will allow AIG to restructure itself and sell off some of its assets to pay back the line of credit.
   
  The important point to note is that the financial difficulties experienced by AIG are limited to AIG and do not impact the financial stability of subsidiaries such as American General Life. Life insurance companies are regulated at the state level, and as such, are required to meet financial standards set by the states to ensure adequate reserves are held to meet the ongoing obligations of the companies. In other words, at no point were any policies issued by American General Life in any danger. In fact, the National Association of Insurance Commissioners recently released a statement regarding the company to help calm the nerves of policy owners.
  
  So despite all the negative news surrounding AIG recently, it is important to understand why we stand behind American General Life and continue to recommend the company's term life insurance products to our customers when appropriate.

• Stop the Press! AIG Down But Not Out
  

  Surely you have heard of the current volatility in the financial markets. And most likely you've also heard the name AIG mentioned extensively throughout the extraordinary media coverage these recent events have received. As AIG is the parent company of one of our life insurance marketplace partners, American General Life Insurance Company, we believe it is important to communicate what we know to the many American General life insurance policy owners and current applicants we call our customers.
  
  As you can imagine, we have received a considerable amount of concern over the recent developments at AIG and the media attention the company has received. Although we have heard directly from American General Life on this matter, the most direct answer we can provide at this point is we just do not yet know how all of this will shake out. Of course, as a subsidiary of AIG, American General is vulnerable to any negative developments its parent company experiences. Whether the company will be held by AIG, acquired or spun off in some fashion remains to be seen.
  
  However, American General is still the nation's largest term life insurance company, and for that reason, we remain confident the company will come out of this in good shape.
  
  For current policy owners, it is highly unlikely you will lose your existing coverage. There are many layers of protection for you, including cash reserves on hold to pay claims and state government guarantees. The articles listed below include more details on this. We recommend you continue to pay the premiums on your policy at this time.
  
  For current applicants, we recommend you continue along with the application process. Keep in mind, despite these events, your original need for life insurance coverage still exists.

  With that said, we certainly understand if you personally have your doubts or remain concerned. If so, we will absolutely work with you to move your policy or application to another A-rated company within our marketplace. However, please understand there is no rush to do this. In most cases, it is better to take a wait-and-see approach before making any drastic changes.
  
  The following links may be helpful to you in learning more about recent developments at AIG and the possible effects of these events.
  

  • Protection for AIG Customers - The Wall Street Journal - 9/16/2008
  • 5 Questions:  Why AIG Matters to You
    
    

    NEW YORK (CNNMoney.com) -- American International Group is the world's largest insurer and at the moment, Wall Street's biggest worry.

    The insurer is struggling to raise cash while economists and investors debate whether or not it should get a government bailout. Despite the company's importance, the average American is probably not sure how, or why, its problems will affect them.

    Here are five key questions and answers about AIG's current woes and what they mean to you.

    I have insurance through AIG. How worried should I be about the problems at the company?

    At least in the short term, you probably don't need to be worried at all. The problems are with the AIG holding company, not the individual insurance company subsidiaries that you do business with, according to a source with New York State's insurance regulator.

    Even if AIG's holding company is forced to file for bankruptcy court protection, there's a good chance that the subsidiaries will continue to operate normally with no disruption in claims payments. That has happened in the case of other insurance holding companies bankruptcies in the past, such as Conseco.

    What guarantees are there that my claims will be paid?

    Typically, if an insurance company falls into financial distress and is at risk of having claims that exceed the assets it holds to make those payments, the insurance regulator in its home state will take control of the firm and make payments.

    The state regulator will not only use the firm's own assets to make those payments but if necessary can also make payments out of a state fund into which all insurers in the state are required to pay.

    This guarantee applies not just to traditional insurance policies but also to retirement products that have a promised payout, such as annuities.

    But there are limits to the payments that will be made to customers that vary depending on which state a particular AIG subsidiary is based, according to Joseph Belth, professor emeritus of insurance at Indiana University and editor of The Insurance Forum, a newsletter often critical of the industry.

    Should I be thinking about changing my policy away from AIG to another insurer?

    While credit rating agencies downgraded debt held by AIG on Monday, AIG's ratings are still considered investment grade and the company's insurance subsidiaries are considered to be secure, at least for now.

    Belth said changing insurers is not a simple decision.

    "A lot depends on what kind of insurance you talk about," he said. "If you're talking about life insurance, you have to think about whether you can qualify with a new insurer, if your health has changed. But it's something you have to consider if the ratings decline into the vulnerable range."

    Why should I care about problems at AIG if I'm not a customer?

    AIG is by far the world's largest insurer and its stock is found in many mutual funds, including any S&P 500 index fund. It is also a component of the Dow Jones industrial average. All by itself, it's been responsible for dragging the Dow down more than 400 points so far this year.

    AIG is also active in the business of credit default swaps, complicated financial instruments used by investors to protect themselves from bond defaults. Lehman Brothers was another major player in that field. If both go away, it would create a tighter credit market for consumers and businesses trying to get loans.

    For this reason, there is a debate a