PB Week: AIG attempts to reassure brokers
On Monday evening I returned from Spain to find the financial world seemed to have turned upside down, writes Andrew Tjaardstra, editor, Professional Broking .
So much has happened this week, that even the loss of independence for Merrill Lynch to Bank of America barely received any news coverage. It has all been about the next crisis with first Lehman Brothers, then AIG and now HBOS in trouble. This is the week the financial world changed and journalists could for once use words such as unprecedented, crisis and scary with outright justification.
AIG has been far the biggest story with its tentacles interlocked deep into the world’s financial system. It has sent all its UK brokers a letter today saying AIG UK maintains capital in excess of £900m which exceeds the regulatory requirement.
In addition it says:
AIG UK’s ability to pay claims and to protect companies and consumers in the UK and around the world is undiminished AIG UK is a stand alone company separate from any other AIG Group legal entity AIG UK maintains strong liquidity and generates significant positive cash flow AIG UK’s financial strength ratings as at 16 September 2008 are A+ from S&P. A1 from Moody’s and AA- from Fitch (ratings “watch negative”)
The broker reaction to AIG’s woes has been mixed with most taking a cautious wait and see approach. Marsh’s chief executive Dan Glaser posted a letter on its global website to reassure customers on Tuesday saying “we have no restrictions on the use of AIG insurance company subsidiaries for client placements.” It has also established a link on its website to keep customers aware of updates. However, the Jelf Group has become one of the first brokers to stop trading with the troubled US giant, now 80% owned by the US government. Alex Alway, Jelf’s chief executive, said his firm had stopped placing with AIG albeit reluctantly. I met with one broker yesterday who had to rush off to hold a meeting with a worried client.
Meanwhile, the merger of HBOS and Lloyds TSB is set to create a top ten insurer with a huge customer base. The Competition Commission would surely have had something to say about the creation of such a huge bank, if they had the chance that is. Where will this all end? Well, you wouldn’t want to bet on it.
Comment
If you would like to comment on this blog please post your comment below or e-mail andrew.tjaardstra@incisivemedia.com
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@insuranceage.co.uk or view our subscription options here: https://subscriptions.insuranceage.co.uk/subscribe
You are currently unable to print this content. Please contact info@insuranceage.co.uk to find out more.
You are currently unable to copy this content. Please contact info@insuranceage.co.uk to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@insuranceage.co.uk
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@insuranceage.co.uk
More on Regulation
FCA’s home and travel super-complaint response triggers praise and warnings from experts
Industry specialists have praised the clarity and transparency of the Financial Conduct Authority’s response to the Which? super-complaint about the ‘broken’ home and travel insurance markets but warned the actions may not “get to grips” with “growing problems”.
End of Year Review 2025: UKGI’s Jill Hambley
Jill Hambley, MD of the consultancy division at UKGI reflects on the shake-up at the FCA, the potential non-financial misconduct debacle at Lloyd’s, and shows an aptitude for using Gen Z terms.
FCA commits to expanded work in response to Which? super-complaint
The Financial Conduct Authority has promised to do more work on improving claims handling and consumer understanding of cover in light of Which? hitting the watchdog with a super-complaint about the ‘broken’ home and travel insurance markets.
Experts underwhelmed by FCA insurance rules simplification
Market specialists have given a lukewarm welcome to the Financial Conduct Authority’s changes to the insurance rule book, flagging missed opportunities, disappointments and branding the outcome as unlikely to get pulses racing.
FCA confirms insurance rules simplification
The Financial Conduct Authority has confirmed changes to simplify its rules for brokers and insurers including ongoing training and product reviews and revealed further plans for next year.
With Brewis and Mills gone, what can brokers expect from the FCA in 2026?
Compliance experts are hoping for a slowdown and simplification of rules from the Financial Conduct Authority throughout 2026 following Matt Brewis and Sheldon Mills exit from the regulator. Rosie Simms reports.
What does the 2025 Budget mean for insurance brokers?
On Wednesday afternoon, after weeks of speculation (and an unprecedented early leak by the Office for Budget Responsibility), the Chancellor finally revealed her second Budget. Tom Golding, PKF Littlejohn partner considers some of the main tax changes and what these may mean for insurance brokers.
FOS plans to hike levies to £86m
The Financial Ombudsman Service has opened a consultation on raising its compulsory levy from £70m to £86m in 2026/27 having kept it flat for two years.