The Hindu Business Line : No immediate material impact, Tata AIG assures policyholders

Mumbai, Sept. 18 Tata AIG Life, an insurance venture between Tata Sons and American International Group (AIG), on Thursday sought to re-assure its policyholders that the Wall Street turmoil would not have any “immediate material impact” on the company.

This comes a day after the beleaguered AIG got a $85-billion lifeline from US Federal Reserve to help it come out of its financial mess. The Tatas and AIG have two insurance ventures in India — Tata AIG Life and Tata AIG General. In both these entities, Tata Sons holds 74 per cent and AIG has 26 per cent.

AIG expects that the $85-million secured revolving credit facility by the Federal Reserve would give it adequate time to sell its assets on an orderly basis. The insurer also believes that the proceeds of these sales will be sufficient to repay the loan in full and enable its businesses worldwide to continue.

“AIG’s asset management business in India is well capitalised and governed by stringent SEBI regulations that ensure that client assets are segregated in a separate trust. Our investments, consumer finance and captive software development functions continue to operate in their normal course,” an AIG statement said.

In a separate statement, Tata AIG Life said: “As the US financial crisis goes through some challenging times, we wish to assure that this does not have any immediate material impact on Tata AIG Life.”

Tata AIG Life is well capitalised and is subject to stringent local regulatory and capital requirements, it said. “The company is governed by the Insurance Regulatory and Development Authority and our local solvency margin as at the end of August 2008 stood at over 300 per cent compared with the regulatory minimum of 150 per cent,” the company added.

Tata AIG Life’s branch distribution network expanded from 80 offices to nearly 400 during the last 18 months, while its advisor strength moved up from about 26,000 to 78,000 during this period. Total revenues stood at Rs 2,339 crore for 2007-08.

AIG, in a statement on Wednesday, had said that its extensive Asian operations continue to operate normally and remain adequately capitalised. “AIG continues to pursue alternatives to increase short-term liquidity in the parent company. Those plans do not include any effort to reduce capital of any of its subsidiaries or to tap into Asian operations for liquidity,” the company said.

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