AIG says it has no plans to sell AIG’s foreign general insurance businesses, which includes United Guaranty Canada.
AIG United Guaranty Canada”s direct parent, the Commercial Insurance Group of companies (CIG), is very profitable, and very well capitalized.
The company has said these recent events have had no impact on AIG’s ability to service customers and pay claims. “Our insurance companies remain in strong financial condition,” said John Doyle, chief executive
officer of AIG Commercial Insurance. He says the financial problems at AIG “were never about the insurance subsidiaries.”
AIG says its problems were all about liquidity, or a lack thereof, and these have been addressed by the U.S. government’s loan commitment.
AIG United Guaranty Canada maintains separate and independent capital from AIG Inc.
Its financial position is closely governed by regulators, including OSFI.
In short, it appears that AIG United Guaranty Canada’s business is fairly sound. It’s biggest challenge may be similar to the one facing #2 insurer Genworth Financial: public perception.
Despite having solid Canadian businesses, the market has concerns about each company’s U.S. parent, and the fact that AIG and Genworth mortgages have “only” a 90% government guarantee–whereas CMHC is 100% government backstopped. Are these concerns rational? Most likely not, but calling the market irrational can sometimes be risky in its own right.
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