AMERICAN INTERNATIONAL GROUP (AIG)

Amid the turbulence of the international financial system, the American International Group (AIG) – the largest American insurer and ranks fourth globally – was faced with serious liquidity problems, which prompted the Federal Reserve Board to authorise the Federal Reserve Bank, New York, to grant AIG a loan of USD 85 billion. This action will allow AIG to honour its commitments as and when they fall due and to take appropriate measures to set right its financial position. On the other hand, the action of the Federal Reserve Board has undoubtedly imparted confidence on those who are owners of insurance policies or financial instruments of AIG. As regards the situation of the Macau Branch of American International Assurance Company (Bermuda), Limited, the interests of the policy owners, insureds and beneficiaries were never at risk, given the prudential supervisory mechanism set in place under the Macau Insurance Ordinance. In reality, according to the provisions of the said law, insurers are required to have at their disposal financial compatibilities to cover their insurance liabilities, which are in the form of technical reserves and solvency margin. The technical reserves are required to be backed up with certain admissible assets as determined by the Monetary Authority of Macao (AMCM), and such assets cannot be uplifted without the express authorisation of the AMCM or, in certain cases, Chief Executive of the MSAR. The Macao Branch of the American International Assurance Company (Bermuda), Limited has duly covered its technical reserves with admissible assets, with the cover ratio being over 100%, while the solvency margin is in excess of the required minimum under the legal framework for insurance activity. In view of the above, the AMCM considers that the economic-financial situation of the Macau Branch of American International Assurance Company (Bermuda), Limited is solid and that the liabilities arising from insurance contracts issued by the said insurer are adequately guaranteed.