AIG keeps home fires burning

So said a New York employee of American International Group said after the US Federal Reserve's $107 billion rescue this week:

He was not fussed that the Fed loan meant the US Government would take 80 per cent ownership and AIG boss Robert Willumstad would be replaced with government appointee Edward Liddy.

In Australia, clients of AIG and insurance brokers who place with the American company do not seem fussed either. They want AIG to keep underwriting here.

Branch and division managers of AIG are known to have reported positive feedback from brokers and clients around the nation.

Chris Townsend remains CEO of the general insurance side of AIG Australia, and Stuart Harrison is firmly at the head of AIG Life in Australia.

As a sign of Australian faith, when Chris Townsend rose to make the keynote address at ANZIIF's Reinsurance Rendezvous in Sydney yesterday, he did so to unanimous applause.
The show of good faith by industry peers must have alleviated fears by some clients because AIG Australia is arguably the largest insurer of extended warranty insurance in Australia – for big retail conglomerates such as Retrovision. This is apart from those who self-insure.

It's also big in excess liability and other specialty lines.

Mr Townsend said on Wednesday: "The trading position of the group's general insurance arm remained strong and that as far as the Australian operation was concerned it was business as usual.”

Media reports in Australia suggested some parts of AIG maybe sold off with insurers such as QBE and AXA ready to take over various divisions, although AIG here is not beleaguered like its parent.

QBE has been reported by British press in the past few weeks as a possible buyer of first, Royal & SunAlliance in the UK, except that RSA profited handsomely last year, and Australian reports say QBE could buy at least part of IAG, or Suncorp, or maybe an underwriting agency or two.

QBE's CEO Frank O'Halloran will buy what he wants, where he wants and when. Conjecture is not part of his vocabulary. He also has the canny experience of QBE chairman John Cloney behind him. It was Cloney as CEO that headed the growth of QBE to a global force in the 1990s.

While all the fuss is going on with global stock markets, the insurance market here is still hardening.

And Gary Seymour, CEO of Macquarie Premium Funding says: "We are seeing an increase by brokers seeking greater access to premium funding for their clients. As the market hardens, and on the back of underwriting results and the credit issues, more clients are seeking premium funding arrangements for their insurance.”

John Heath is the Editor of Insurance News Australia.