Tuesday, 16 September 2008

Will AIA Bankrupt?

As the recent financial market is tensing up, I decided to put on hold my 5 Part series on Insurance for the time being and address the more pressing financial issue.I have receive a few call from my client on the outlook of AIA (although I am not an AIA agent) which I have explained as per the following article I found in Channel NewsAsia so I decided to post it here instead of repeating myself. :-)

MAS urges AIA policyholders not to terminate policies hastily


In summary:

MAS explained that there are regulatory requirements, ensuring that all insurance companies maintain statutory insurance funds, including an investment-linked fund. This fund is segregated from its head office and other shareholders' funds. Within these funds, insurance companies must maintain sufficient assets to meet all its liabilities to policyholders, which include participating policies and investment-linked policies.

My conclusion:

AIA is just going through a downgrade of rating but even if they are rated A or worst still to B rating is still consider financially strong. The reason why many people panic is because this news is place together with Lehman Brother declaring Bankrupt and Merrill Lynch sold to Bank of America, so subconsciously everyone think that AIA is also near to bankrupt which is no where found in the news. In fact one of my friend from AIA recommend me that this might be a good time to buy AIG share at discount. However my take is in current market condition, nothing is impossible with the two financial giant in such a bad shape. :-)

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