AIG roots run deep in Asia

People flock to the American International Assurance Company, Limited (AIA) Singapore branch office in the financial district of Raffles Place yesterday. Hundreds of worried policyholders, some hoping to terminate their agreements, lined up outside the Singapore office of troubled global insurance giant American International Group (AIG) and its wholly-owned subsidiary AIA.Photo: AFP

AIG has deep roots in Asia, and the troubled insurance giant is now trying to reassure millions of policyholders and tens of thousands of employees in the region that it will survive.
American International Group, rescued by an 85 billion dollar US government bailout, was founded in China in 1919, and Asia remains a vital market for the firm, whose collapse could well have heralded a full-on global crisis.
Of AIG's 116,000 staff in 130 countries, almost half are reportedly in Asia, where wholly-owned subsidiary American International Assurance Company Limited (AIA) manages most of the operations in Southeast Asia, China and Australia.
Even after the US Federal Reserve rescued AIG, hundreds of worried customers converged on the company's Singapore subsidiary on Wednesday, many looking to end their contracts -- some having flown in from abroad.
Others nervous policyholders went to the local offices in Hong Kong. AIG, best known to many around the world as the sponsor of English football powerhouse Manchester United, also has key business in Taiwan, China and Japan.
"I am really worried," said a tourist from the Chinese mainland surnamed Chu, who dragged her suitcase to the company's local offices in Hong Kong before catching a return flight home.
"Despite the rescue bid by the US government, AIA will still have to sell its assets to pay back the loans," she said.
From its beginnings in Shanghai 89 years ago -- it was founded by a Dutch American who was the first foreigner to sell insurance to the Chinese -- AIG grew into a behemoth with worldwide interests including aircraft leasing.
Now AIG's Asian units are trying to distance themselves from the parent firm's troubles, saying they remain well capitalised.
In Taiwan, where AIG owns 95 percent of Nan Shan Life Insurance, a spokesman said it is "business as usual." Similar assurances came from subsidiaries in Hong Kong, Singapore and Malaysia.
AIA Singapore said it has more than sufficient capital and reserves to meet obligations to policyholders. It said the funds maintained in Singapore are segregated from AIG.
In Shanghai, AIA operations "have been running normally and AIA will fulfill the commitment to Chinese clients," a spokesman said.
But some worried policyholders were not convinced.
Pentja, an Indonesian, was in the Singapore queue, saying he had flown from Jakarta and gone immediately to the AIA office.
He said he knew about the US rescue plan for AIG but wanted to terminate his three policies anyway.
The bailout deal, sealed with AIG on the brink of collapse, gives the US government a stake of 79.9 percent in the insurance company in exchange for the loan.
Singapore's de facto central bank, the Monetary Authority of Singapore, said AIA has enough assets to meet liabilities to policyholders, who should "not act hastily to terminate their insurance policies".
Gary Kwan, a Hong Kong broker with financial services group Convoy, said he advised most of his clients to keep their AIA policies.
"I trust that Hong Kong's regulators are going to do all they can to protect individual investors," he said.
Even if AIG failed, local business units should be able to carry on, said Tey Tze Ming, a market strategist at Saxo Capital Markets Pte Ltd.
Speaking before the Fed announced its rescue plan, Tey said a rush to liquidate policies is an over-reaction.