AIG Vietnam is in the safety zone

Jamie Rains, senior vice president, chief agency officer of AIA/AIG Southeast Asia and new general manager of AIG Life Vietnam, said it was not necessary to have a back-up plan for the business in Vietnam. “There is no influence of the turmoil of AIG Group on its subsidiary in Vietnam, the strategy is kept the same and the work runs normally,” said Rains.

The AIG Life Vietnam margin of solvency is 229 per cent over the level required by the Ministry of Finance (MoF), reaching VND480 billion ($30 million). The company also quoted the regulations by the ministry that all premiums should be re--invested in Vietnam and 90 per cent of premium is invested in the Vietnamese government bond.

Rains also revealed that the company has also prepared a large amount of cash to meet any demand from local customers for surrendering or getting new loans. A MoF Insurance Department official said that the AIG Vietnam was still in excess of the legally required margin of solvency.

“This means in any cases, AIG could ensure their financial obligations to Vietnamese customers,” said the official.
Phung Dac Loc, Association of Vietnamese Insurers’ (AVI) general secretary, said that so far Vietnamese policies holders were not coming to AIG Life Vietnam offices to cancel policies.

In Hong Kong, thousands of customers have queued up in front of AIG offices to cash out their money. “The situation is not that bad, but in case that happens, I think the government would certainly ease off the tension by some announcement to the public. This would be necessary to protect foreign investors,” said Loc.

In Vietnam, the life insurers’ fund should be divided into two parts: equity fund, the company’s money and the customers’ premium fund collected from policies holders’ premium. With the customers’ premium fund, the insurer is allowed to invest with no limitation on banking deposit and T-bond. The insurer is allowed to lend up to 50 per cent with guaranteed projects.

Loc reassured that AIG Life Vietnam is running well with required margin of solvency by the MoF. “The customers should not be panic by negative news from the west,” said Loc. According to AIG Life Vietnam, the policies issued by local operations all over the world are under the management of local incorporations and AIG Group is not planning to scale down the capital of any local incorporation all over the world.

For the plan of other subsidiaries from the CFG (Consumer Finance Group), which is credit card and credit company of AIG in New York looking for doing business in Vietnam, Rains said that there is information to affirm that they would not come but it is still early stage to say that they will go.