September 18, 2008
FOR the second day hundreds of anxious policyholders lined up in the hot sun outside Singapore offices of global insurance giant American International Group (AIG) Thursday, Sept 18, despite a US government bailout of the firm.
Hundreds more -- some vowing to terminate their policies -- were already inside the offices of AIG and its wholly-owned subsidiary, American International Assurance Company Limited (AIA). They had returned after lining up on Wednesday without getting served.
Many in the crowd were unmoved by an announcement from the US Federal Reserve, the central bank, that the United States government would give an unprecedented loan of up to US$85 billion to AIG in a bid to avert a global financial calamity.
"I don't have any more confidence in this company," a woman who gave her name as Annie said after surrendering her two policies. She said the Fed's move made no difference to her decision.
"I'm a bit apprehensive" about the company's future despite the bailout, said another woman. The retiree, who declined to give her name, said she decided to liquidate her policy because the potential return was not large enough to justify the risk.
"If my calculation is correct, I will break even" by cancelling the policy, she said.
An agitated businessman, Chan Foo Choong, also lined up to liquidate his family's policies.
"If anything happens, will you pay me?" he asked an AFP reporter.
Others among the queue were simply seeking answers.
One AIA staff member said employees worked until after midnight to deal with inquiries from the hundreds who thronged the office on Wednesday.
After lining up to take numbers for service on Thursday, members of the crowd dispersed to pass the time until they were called inside.
Staff said they gave out 500 numbers on Thursday before more people lined up to collect numbers for Friday.
An AIA spokeswoman could not say how many customers in Singapore had cancelled their policies.
In Hong Kong, RTHK radio on Wednesday cited government sources in a report that said more than 1500 insurance policies with the subsidiary there had been terminated over two days.
In Taipei on Wednesday, more than 1200 customers descended on a downtown office of AIG subsidiary Nan Shan Life Insurance.
Authorities and AIA subsidiaries around the region sought to assure customers that the local firms were not in danger.
AIA Singapore took out a full-page advertisement in the Straits Times newspaper Thursday telling policyholders it has "more than sufficient capital and reserves to meet all obligations."
Despite short-term liquidity pressures at AIG, the Singapore unit is a "strong, well-positioned business," Mark O'Dell, the local company's executive vice-president and general manager, wrote in the advertisement.
He said the funds in Singapore were segregated from AIG.
The insurance firm appeared to be in a death spiral after more than a week of panic and turmoil in financial markets that led to the failure of US investment giant Lehman Brothers and a sale of Wall Street rival Merrill Lynch.
They were all casualties in a financial crisis that grew out of troubles in the US subprime, or higher-risk, mortgage sector last year.