How stable are life insurance companies?

Are these stable companies?

Every company our agency uses has a strong financial rating as determined by the various rating agencies such as A. M. Best, Standard and Poor's and Moody's Bond Ratings.

What is "Preferred Plus", "Preferred", and "Standard"?

Insurance companies are learning more and more about identifying their risks. Since cancer and cardiovascular disease are the two leading causes of death where the risk can be lessened by the individual, companies zero in on these risks. Those that qualify for the super preferred would be less at risk, then the preferred, then the standard. These companies look at height and weight, blood pressure, cholesterol(good and bad), family history(relatives dying before 60 of CV disease or cancer), personal history of cancer and CV disease, and smoking history.

nsurance industry; AIG insurance policy, annuity holders shouldn't worry

Insurance customers of AIG shouldn't worry yet

Insurance customers of AIG shouldn't worry yet
Insurance industry; AIG insurance policy, annuity holders shouldn't worry
September 17, 2008: 05:27 PM EST

NEW YORK (Associated Press) - The financial problems at American International Group Inc. may be causing you great concern today if you hold an AIG life, health, home or auto insurance policy, or have an annuity with the company.

Insurance industry officials and analysts say there's little for policyholders to worry about today, but they say they're watching the situation carefully.

They're keeping a close eye, because the potential impact in the United States for insurance policy holders is significant. The Insurance Information Institute says AIG ranks in the top 10 of insurance companies in fixed annuities sold through banks. Fixed annuities guarantee the principal and fixed payments to the buyer for a specified period of time, usually until death. AIG also ranks among the top writers of auto insurance, commercial insurance and life insurance. It led the nation in fixed annuities sold through banks, writing more than $5 billion in 2007. AIG also led in commercial insurance writing $24 billion in policies in 2007.

Here are the answers to some key questions about where AIG's insurance businesses stand and how it may effect you.

Q: What is going to happen to the insurance businesses owned by AIG?

A: The infusion of $85 billion into AIG offers financial stability so the company will have time to decide which assets or business segments it should sell and to whom. It hasn't been disclosed whether the insurance segment, or portions of it, would be sold.

"We believe the insurance subsidiary to be financially sound and continues to be sound today," said analyst Joyce Sharaf of A.M. Best Co., one of the nation's main insurance ratings companies. She said Wednesday that AIG holds major insurance businesses that "are enviable franchises that could be sold in whole or in part."

A.M. Best analyst Marc Steinberg said he's continuing to review AIG's ratings and analysts are closely monitoring the situation as it unfolds. Analysts believe, however, that insurance policyholders are safe for now, he said.

Insurance regulators in New York, which have regulatory oversight over New York-based AIG, and the National Association of Insurance Commissioners said the company's insurance operations remain solvent and can pay claims.

Insurance companies in the United States are closely regulated by government agencies established by the states in which they are based.

The company released a statement Tuesday evening which said: "Policyholders of AIG companies around the world can rest assured that AIG's commitments will continue to be honored."

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Q: Should I be worried if I have health or life insurance policies with AIG and what if I have a retirement annuity?

You should first keep in mind that AIG continues to operate, it has not filed for bankruptcy protection and has not been declared insolvent. Even if the insurance portion of the business was for some reason declared insolvent, there are protections in place similar to the FDIC insurance that backs up your bank deposits.

Life and health insurance, and products like annuities are covered by insurance guarantee associations that have been established in every state, said Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations. The associations step in when insurance regulators in your state declare an insurance company insolvent and it's placed in receivership.

The level of coverage may vary by state, but every state association provides withdrawal and cash value coverage for annuities of at least $100,000. About a dozen states offer up to $300,000 and a few others offer up to $500,000.

Life insurance policies are backed up with at least $300,000 in life insurance death benefits and $100,000 in cash surrender or withdrawal value. States offer at least $100,000 in health insurance policy benefits.

In the past 25 years more than $20 billion in coverage benefits have been provided by the state associations for policyholders and annuity clients of dissolved insurance companies. In that time, the associations have provided protection for more than two million policyholders and worked on more than 60 multistate insolvencies.

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Q: What should I do if I hold a homeowner's or car insurance policy with AIG?

Every state, the District of Columbia, Puerto Rico and the Virgin Islands have established property guarantee funds similar to those established to protect against losses in life and health insurance.

Guaranty funds generally pay the amount of coverage stipulated by the policy or $300,000, whichever is less. Each state has a law that places a cap on the coverage and some have higher amounts. New York, for example, has a property/casualty cap of $1 million.

Most state guarantee funds pay all of their state's workers' compensation benefits.

Since the late 1960s, the property/casualty guaranty system has paid out about $21 billion in claims on behalf of insolvent insurers. About $10 billion disbursed in the last six years, largely because of the frequent and severe hurricanes that have struck the Gulf Coast.

Since 1976, there have been about 600 insolvencies of property and casualty insurers. There are 2,648 property casualty insurers licensed to do business in the United States.

AIG life Insurance

AIG collapse would have cost N.C. $1B - Charlotte Business Journal:

If the federal government had allowed insurance colossus American International Group Inc. and its subsidiaries to fail, N.C. regulators — and ultimately state taxpayers — would have been left with a mess that would have cost, according to a conservative estimate, more than $1 billion to clean up.

That’s the back-of-the-envelope number that officials at the Raleigh-based N.C. Insurance Guaranty Association came up with as they monitored this week’s developments on Wall Street, including the $85 billion federal loan guarantee that’s supposed to save AIG.

“We wanted to see what our exposure would be,” says Mike Newton, the association’s guaranty director. “And the more we looked at it, the wider our eyes got.”

The federal government now controls almost 80 percent of AIG.

Insurance companies, large and small, don’t file for bankruptcy in the way most businesses do. When they topple, they go into a liquidation process in which regulators try to make sure policyholders are protected ahead of other creditors.

On the state level, industry groups such as NCIGA enter the picture to ensure all outstanding policy claims are paid — on auto crashes, for example — and to refund customers any premium dollars paid for coverage that won’t be coming.

The industry groups get the funds to do that by passing the hat among the other insurance companies doing business in the state. In North Carolina, contributions come from 700 firms that, in 2007, had $6.5 billion in premiums in force. Any cleanup money those firms pay can then be deducted from their N.C. tax bills, which means the taxpayer ultimately picks up the tab.

As news of AIG’s chances of survival went from bad to worse, Newton searched the records of the 13 AIG property and casualty companies writing business in North Carolina. Those firms include American Home Assurance, National Union Fire and Granite State Insurance.

Outstanding claims and refundable premiums — the tab NCIGA would be held liable for refunding in case of a collapse — totaled $785 million. Of that total, $359 million was in the workers’ compensation arena, $43.6 million in auto insurance and $383.4 million in “all other categories, including fire, marine and similar types of policies.”

“These numbers we were looking at were just huge,” says Newton.

And that was just in North Carolina.

“Obviously, these numbers are the reason why the feds had to move,” says state Rep. John Blust of Greensboro, a member of the House Insurance Committee.

An AIG failure would have dwarfed the cost of any previous insurance collapse in the state. The most costly to date came after the demise of workers’ comp writer Reliance Insurance. That tab was $80 million.

In an AIG meltdown, the cost of a North Carolina cleanup would have gone even higher than Newton’s initial estimate, to perhaps $1 billion or more.

That’s because seven AIG subsidiaries also write life and health policies and various annuity plans in North Carolina. On the annuity front alone, AIG’s Sun America, at the beginning of 2007, was the state’s third-largest annuity writer at $331 million, giving it a market share of nearly 6 percent. Another subsidiary, AIG Annuity Insurance, had $46 million on its books, for a market share of nearly 1 percent.

The total North Carolina market is about $6 billion. The figures were complied by the state Department of Insurance.

If AIG’s subsidiaries firms had been caught up in the failure of their holding company, a second state group, the North Carolina Life & Health Insurance Guaranty Association, would have activated a procedure to pay consumer refunds of up to $300,000 per policyholder for claims and premium refunds.

That agency’s head, Lowell Miller, declines to put a figure on the possible cleanup costs. “But it would have been pretty significant,” he says. “The life and health numbers are big, and they generally are long-term contracts.”

Kristin Milam, a spokeswoman for the N.C. Department of Insurance, says the department routinely monitors the economic health of all the firms doing business in the state, including those under the AIG umbrella.

She notes it was the AIG holding company, not the insurance subsidiaries, that was in crisis. And Newton says all the AIG firms doing business in the state are well-capitalized and “doing fine.”

But because of the turmoil on Wall Street, he says it’s impossible to say for certain if the damage would have been limited to the holding company if AIG had gone under.

Annuity

Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

Insurance Consumers Protected by Solvency Standards (NAIC)

FOR IMMEDIATE RELEASE

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS
Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

KANSAS CITY, Mo. (Sept. 16, 2008) — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger today issued the following statement in response to the financial issues facing American International Group (AIG):

“We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay.

“In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.

“As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.

“The No. 1 job of state insurance regulators is to make sure insurance companies operate on a financially sound basis. If needed, we immediately step in if it appears that an insurer will be unable to fulfill the promises made to its policyholders. This includes taking over the management of an insurer through a conservation or rehabilitation order, the goal being to get the insurer back into a strong solvency position.

“State regulators have numerous actions they can take to prevent an insurer from failing. Claims from individual policyholders are given the utmost priority over other creditors in these matters — and, in the unlikely event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds. These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits.

“It is a state insurance regulator’s responsibility to protect policyholders and ensure a healthy, competitive market for insurance products. Strict solvency standards and keen financial oversight — based on conservative investment and accounting rules — continue to be the bedrock of state-based insurance regulation.”

About the NAIC

Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit www.naic.org/press_home.htm.

Annuity

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS

Insurance Consumers Protected by Solvency Standards (NAIC)

FOR IMMEDIATE RELEASE

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS
Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

KANSAS CITY, Mo. (Sept. 16, 2008) — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger today issued the following statement in response to the financial issues facing American International Group (AIG):

“We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay.

“In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.

“As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.

“The No. 1 job of state insurance regulators is to make sure insurance companies operate on a financially sound basis. If needed, we immediately step in if it appears that an insurer will be unable to fulfill the promises made to its policyholders. This includes taking over the management of an insurer through a conservation or rehabilitation order, the goal being to get the insurer back into a strong solvency position.

“State regulators have numerous actions they can take to prevent an insurer from failing. Claims from individual policyholders are given the utmost priority over other creditors in these matters — and, in the unlikely event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds. These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits.

“It is a state insurance regulator’s responsibility to protect policyholders and ensure a healthy, competitive market for insurance products. Strict solvency standards and keen financial oversight — based on conservative investment and accounting rules — continue to be the bedrock of state-based insurance regulation.”

About the NAIC

Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit www.naic.org/press_home.htm.

Annuity

Life Insurance - If I apply and don't get the rate I applied for, what happens?

The company many times will make another offer. If our office thinks we can get a better offer from another company, we will ship your file over there.