A few months after the eloquent "A.I.G." of its sales, the company brochures a ahead of its competitors and recovered a title he held for many years before its rescue plan - the top vendor of fixed annuities for clients of the Bank.
People who buy annuities in the branches of the Bank may be surprised to know that they are signing with A.I.G. Contracts are available under the names of two subsidiaries, Western national life and a first. Until last June, they carried the name of A.I.G. annuity.
Annuity booming sales are a bright spot of American International Group, which must raise funds to repay the Federal Government.
But some competitors and consumer advocates are questioning on return of A.I.G., saying that its ability to keep federal money drawing gives an unfair advantage of any just one year after its Government rescue.
Often sold as alternatives to the certificates of deposit, fixed annuities are insurance contracts guaranteeing a fixed rate of return, unlike variable annuities, which yields may follow the ups and downs of the markets.
People buy banks tend to be you are looking for something safe, but who pays more than a certificate of deposit. Contracts of fixed annuity usually run for many years, and even before the A.I.G. rescue plan last year, customers began to have qualms about stopping their money with a company whose future was uncertain.
After the rescue, they have accelerated their withdrawal of A.I.G., even if they had to pay a penalty to retrieve their money. Most of the new buyers were looking for other insurers, such as Transamerica and the life of New York, which had higher ratings and who has not received assistance through the Troubled Asset Relief Program.
But since June and the name change, the A.I.G. subsidiaries were upsetting in their own way to the top. In the third quarter, Western National more fixed annuities in the banks than any other insurer, according to Kehrer-Limra sold, research and consultancy following sales of insurance and investment products in banks.
The life of New York, who had claimed the head of the first half of this year, has now spin-off third and Transamerica is fourth. Other former contenders, such as Genworth and MetLife, are not in the top five more.
Although fixed annuities can provide their transmitter much money quickly, such as bank deposits, they can also erode capital an insurer more quickly than sales of other types of insurance. This is because they need the company to set aside large reserves at the outset.
This can pose risks are not only theoretical. Another A.I.G. - a subsidiary that the Federal Reserve Bank of New York has recently taken a 9 billion stake in - sold such a large volume of fixed annuities by Japanese banks that it wound up with insufficient capital to support its activities.
Mark Herr, a spokesman for A.I.G., said that the unit, the American Life Insurance Company, has restored its capital by the transfer of the risks "with the co-payment and co-insurance amended," among other techniques. He said that the problem had not reoffended since 2007.
Normally, only the insurers pools tend to strongly promote fixed annuities, in order to avoid their resources too thin elongation.
But it is not normally. National Western is one of a dozen of A.I.G. subsidiaries of insurance whose investment portfolios were dipped in by A.I.G. ready of securities - business affiliate which brought together more than 80 billion dollars of assets of insurers and loaned to the banks and Wall Street, to be used in trade.
The program titles imploded. Sharing of Western National loss was $ 7.9 billion, and the company has been modernised under the Federal rescue of A.I.G.
Joseph M. Belth, editor of the Forum insurance, a newsletter focused on consumers that tracks the financial strength of insurance companies, which said at least, buyers have the right to know the extent to which A.I.G., the parent, was standing behind the rents of its subsidiaries. Only subsidiaries are monitored to ensure stands enough money behind their promises.
Competitors stated that they believed that national Western was using Treasury money to finance some of the teaser rates higher in the industry.
"Some insurers sell annuities at rates that give to think they are either build more risk in the investment portfolio that it would be prudent, or using as a way to raise funds, perhaps to pay off other obligations," said Gary e. Wendlandt, Chief investment officer and vice President of New York life.
Judith Alexander, research of the tag, following the terms of annuity, confirmed that Western National offers among the most "bonus rate" on fixed annuities by the banks, allowing customers to capture more than 5% for a year, but she said that it also offered the lowest guaranteed contracts, in the neighbourhood of 2.6%, over a longer period.
The head of the Western national Executive, Bruce r. Abrams, said customers were opting for the longer terms.
"We are not selling many product bonus-rate", he said. "It is the multiannual guarantee rate." This is what clients are looking for, and that is what we are going to sell. »
He also cited relationships of long standing of the National Western with banks, it has enabled the company negotiate individual terms with banks each week, giving them a degree high flexibility. For example, he said, if a bank wants to attract the attention of customers by offering them higher than those proposed National Western interest, Western National may arrange for them to do so by compensating the cost with a smaller commission. The Bank would try to make a difference on the volume.
"It is unique," he said. "We have been so for more than 15 years."
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