September 16, 2008 / 10:06 AM / 10 years ago

Worried Singaporeans rush to redeem AIG policies

SINGAPORE, Sept 16 (Reuters) - Hundreds of anxious investors thronged the Singapore office of a unit of American International Group (AIG.N) to redeem their policies on Tuesday, on fears the U.S. insurance giant could be the next financial firm to tumble. American International Assurance, a wholly owned subsidiary of AIG (AIG.N), pinned up an article from a local paper headlined “AIA policy holders get assurance” at its entrance, but that did not deter wary investors who are facing a deluge of bad news after Lehman Brothers LEH.N LEH.P filed for bankruptcy protection on Monday.

“There’s so much financial turmoil. Anyway, the yield’s not that attractive,” said 60-year old stock trader Tan Peng Hock, a policy holder in the queue, who said he did not mind surrendering a policy worth about $42,000 despite possible losses.

“I prefer to hold cash for the time being...It’s better to be safe than sorry,” said Tan.

AIG, once the world’s top insurer by market value, has scrambled to raise cash and has been thrown a $20 billion lifeline by New York state, but came under renewed pressure on Tuesday as ratings agencies downgraded its debt. [ID:nHKG15677]

Security guards were ushering customers to the upper floors as crowds built up outside after lunch at AIA’s office in the central business district of Singapore, a growing wealth management and financial services centre.

A spokeswoman for AIA said the firm would be issuing a statement later on Tuesday.

Singapore’s central bank assured investors on Tuesday that “AIA currently has sufficient assets in its insurance funds to meet liabilities to policy holders”.

“Policyholders should, therefore, not act hastily to terminate their insurance policies with AIA as they may suffer losses from the premature termination and lose the insurance protection they may need,” the statement by the Monetary Authority of Singapore added.

But some investors in Singapore remained unconvinced.

“I want to put the money into a bank account because I don’t know the value of AIA’s assets,” said a 55-year old customer, who declined to be identified, adding he hoped to redeem his endowment fund which had already matured.

The region’s central banks flooded money markets with cash on Tuesday, dishing out $27 billion, as they tried to prevent upheaval on Wall Street from freezing the financial system.

“I just got an investment plan so I want to cut my losses before it becomes worse,” said 38-year-old investor Ed Chow.

For more on financial markets turmoil, click [ID:nN13574113] Additional reporting by Brenda Goh; Editing by Neil Chatterjee and Lincoln Feast

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