AIG in liquidity trouble.

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American International Group, Inc. (AIG) is a major American insurance corporation based at the American International Building in New York City. It has presence in over 130 countries, According to the 2008 Forbes Global 2000 list; AIG was the 18th-largest company in the world. In India it has a joint venture with TATA to offer insurance service. (TATA AIG LIFE INSURANCE COMPANY LTD.).

Due to liquidity crisis American Federal Reserve has granted a loan of $85billion to save AIG, in the return they received almost 80% stack in AIG.

Before the Federal intervention, many policy holders in the various countries have started redeeming their policies because of the liquidity crisis of AIG.

What should Indian policy holder do in such cases?

There should be no need of panic as

  • TATA a very reputed brand of India holds almost 74% stack, it can buy rest 26% stack easily.
  • As per IRDA account of TATA AIG (Life as well general) Insurance Company have enough assets to meet any emergency liabilities.

However with this event one question will start rising that are private insurers a safe place to put your money?

Only time can give answer for this question, however before investing in private insurer one should always check the credibility and balance sheet of Indian insurance partner as in the above case because TATA is a very respectable brand one can rest assured, but what about some companies which has less known Indian partners?

It is perfectly alright if one gets good policy from private insurer compared to LIC but always invest your little time in learning about the credibility of Insurer along with the policy detail.

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