NZ AIG says business as usual

American International Group (AIG) New Zealand says it is business as usual for customers of the troubled giant United States insurance company.

In the United States, AIG is fighting for its survival as the Federal Reserve and authorities seek to prop up financial markets following the failure of investment bank Lehman Brothers and the forced sale of brokerage Merrill Lynch.

AIG has operated in New Zealand since 1970 and has offices in Auckland and Wellington. It provides a wide range of insurance and risk management services to businesses and individuals.

According to AIG's New Zealand website, it currently "protects many of New Zealand's largest companies, as well as smaller businesses, professionals and consumers."

The New Zealand branch of its American Home Assurance Company trades as AIG New Zealand.

A collapse of AIG would sting many of the world's biggest companies across virtually every business sector and could cause chaos in the US$62 trillion (NZ$96.75 trillion) market for credit default swaps, where it is a major player.

The world's biggest insurer has operations in more than 100 countries, including New Zealand and its interests run the gamut from terrorism insurance to sports sponsorships.

However, analysts point out that unlike Lehman, AIG appeared to be facing short-term funding needs rather than questions of solvency.

AIG NZ marketing manager Catherine Shaw said today that things were changing quickly in the United States.

"Information is still filtering down from them to us and I'm reasonably restricted in terms of what communication I can put out there to the NZ public."

She said there had been several calls from customers inquiring about the current situation in the US and NZ.

"However, here it is business as usual."

NZ Insurance Council's chief executive Chris Ryan said today that AIG customers should contact their insurer directly with their concerns.

"Customers should contact the company or their brokers since most of AIG business is done through brokers.

"The brokers' role is to liaise between the insurer and customers," Mr Ryan said.

He said he did not have all the information on the AIG crisis and was unable to advise its customers in New Zealand.

AIG's shares in the US plummeted again on Tuesday after its credit ratings were cut, heightening concerns that it might file for bankruptcy.

Both the Treasury Department and Federal Reserve were tight-lipped about steps they might take to help.

AIG insures more than one-third of the Forbes 400 richest Americans, according to its annual report.

Its aircraft leasing unit boasts a fleet of 900 jets. It ranks as the world's seventh-largest asset manager. It is even the main sponsor of English soccer club Manchester United.

US Treasury Secretary Henry Paulson has made it clear that he has little appetite for expensive bailouts after the government seized mortgage finance firms Fannie Mae and Freddie Mac and pledged US$29 billion to swing a deal for Bear Stearns.

AIG at US$1 trillion in assets is substantially larger than Lehman Brothers and it does business with "virtually every financial institution in the world," money manager Michael Lewitt wrote in the New York Times on Tuesday.

"Regulators knew that if Lehman went down, the world wouldn't end. But Wall Street isn't remotely prepared for the inestimable damage the financial system would suffer if AIG collapsed," he wrote.

But analysts point out that unlike Lehman Brothers, AIG appeared to be facing short-term funding needs rather than questions of solvency or doubts about its business model, and should be able to repay its debt to taxpayers down the road.

- NZPA