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FYI about AIG receivership
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by bill hicks | September 15, 2008 at 07:15 pm
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If AIG goes into bankruptcy, it is called receivership. I worked on the receivership of Executive Life, a Millken related firm about 16 years ago. They had the highest Best insurance rating the day before the filing.
What happened to those affected - retirement annuities, the Califorinia lottery, life policies were all marked down 70 to 90 percent. Lottery winners who thought they were getting 50k a year were getting 5k. Retirees from companies and government entities that used Executive Life to handle the funds had their monthly income drop 90%. Some whole life policies retained 30% of the value.
Retirement funds in this case and in the case of AIG do not come under ERISA guarantees. There are state pools that are privately funded by the industry, but those funds do not come close to what AIG will need. In fact it will deplete most of them. The government and financial institutes do not care about the little guy. They are covering themselves to limit losses that will cause other institutes to fall.
AIG is almost 700 billion in debt. It will take years to settle.
If you or friends are affected by AIG you need to be aware you are not protected and need to adjust your life style quickly if they file.
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Most RecentMost Recommended Comments (5)
at 08:42 on September 16th, 2008
CNBC just said the policyholders and retirees do not have to worry. Do not believe that. The state insurance guarantee funds are funded by the industry and when they runs out that is it. The Fed and Treasury is not involved and will not be at that level. It is similar to Enron stockholders.
at 08:42 on September 16th, 2008
74 million people are affected by AIG.
at 08:07 on September 19th, 2008
You mean 'afflicted'?
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john Flattery (not verified)at 11:50 on September 20th, 2008
Can you move the money you have in AIG retirement to a ERISA guarenteed account....and what might that be?
at 12:35 on September 20th, 2008
no. ERISA comes into play when a company's plan is underfunded. ERISA pays a lot less than what people are getting. A friend of mine was a steelworker. He retired on a 40k a year income. ERISA decided labor work was 10600 a year. That was 22 years ago.