AIG woes won't affect us - Alico

• Text size
•  
•  

DAMMAM - American Life Insurance Company (Alico) has assured its clients and partners in Saudi Arabia and the Gulf region that it is not affected by the cut in the credit rating of its mother company American International Group Inc. (AIG).

"Our mother company, the American International Group Inc. (AIG), is confident that it will surmount the current problems and issues," a company spokesman in Alico's national headquarters in Jeddah said.

"We have received a memo from our MEASA (Middle East, Africa and South Asia) headquarters in Dubai that there was nothing to worry," the Alico spokesman said. Alico operates in 15 countries in the Middle East, Africa and Southeast Asian regions.

Alico markets wide range of life and health insurance protection, but the bulk of its clientele is in medical insurance, particularly in Saudi Arabia. "Our customers in Saudi Arabia are A-1 companies and we are assuring them of stability and liquidity to provide the coverage," an official in the medical insurance department of Alico told Saudi Gazette.

Imad Husseini, Managing Director of Saudi Brokers, an insurance and reinsurance brokerage firm, said Alico is financially solid to provide coverage to its thousands of clients in the region, mostly in Saudi Arabia.

"There is no need to fear, Alico and AIG are very powerful business organizations with no problem in money," Husseini said, who is also a member of the insurance advisory council at the Asharqia Chamber of Commerce and Industry in Eastern Province. "Alico has tied-up investment with the Saudi British Bank (SBB)Saudi British Bank (SBB) and is already registered with the Saudi Arabian Monetary Authority (SAMA), which requires a guarantee of at least SR100 million. Alico could have put a guarantee of SR200 million," Husseini said.

AIG's credit rating has been cut by Standard & Poor's and Moody's Investors Service, threatening effort to raise funds to keep the company afloat and ward off the current crises in global financial markets.

AIG rating cuts may trigger more than $13 billion in collateral calls from debt investors who bought swaps. AIG is seeking $70 billion to $75 billion in loans to replenish capital and stay financially liquid and stable to provide insurance coverage.

AIG has reported a net loss of $5.36 billion or $2.06 per diluted share during the second quarter of 2008, compared to 2007 second quarter net income of $4.28 billion or $1.64 per share. A press statement from AIG stated that the continuation of the weak US housing market and disruption in the credit markets, as well as global equity market volatility, had substantially and adversely affected the company.

By Joe Avancena

© The Saudi Gazette 2008