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AIG Structured Settlement Annuity Market

By Patrick Hindert

What is happening with AIG annuities in the structured settlement market?

Two weeks have passed since AIG's Board of Directors approved the largest government bailout of a private company in United States history just "hours before bankruptcy". In recent years, AIG has been the largest issuer and purchaser of structured settlement annuities.

Prior S2KM blog posts about AIG address:

• AIG - 1: Who do you trust?
• AIG - 2: How strong are structured settlements?
• AIG Structured Settlement Timeline

Financial Ratings:

• The credit rating agencies most recently downgraded AIG and its subsidiaries on September 15, 2008.
• A.M. Best, the most closely watched rating agency within the structured settlement industry, downgraded AIG from A+ to A.
• Structured settlement stakeholders, including agents and recipients, historically have insisted upon a minimum A.M. Best rating of A+.

Primary Market - S2KM spoke last week Friday with the Chief Operating Officer of one of AIG's approved agents for structured settlement annuities. This AIG agent reported:

• The AIG agent has received "almost no inquiries about AIG";
• The AIG agent no longer recommends AIG because of AIG's "A" rating from A.M. Best;
• The AIG agent is attempting "to ignore AIG" despite AIG improving rates for AIG structured settlement annuities as recently as last week.

Secondary Market - S2KM spoke last week and today with two senior sales representatives from a leading structured settlement transfer (factoring) company. These sales representatives reported:

• Structured settlement annuities, including AIG annuities, "are still good investments".
• Their company, a substantial purchaser of AIG annuities, continues to purchase AIG annuities.
• For the past 2 weeks, their company has experienced "very heavy traffic" - much of it related to AIG.
• Their company believes investors will continue to purchase structured settlement derivative securities: "If we can't sell AIG annuities, we won't purchase AIG annuities".
• Asked why AIG structured settlement recipients call factoring companies instead of AIG agents, both essentially replied: "many AIG structured settlement recipients blame their structured settlement advisors and trial attorneys for recommending AIG annuities. The last people they call for advice about AIG annuities are their attorneys and AIG agents".

For a list of AIG's approved structured settlement agents, see the "Featured Links" on AIG's structured settlement website.

To find a factoring company, try a Google search for "structured settlement".

Full post as published by Beyond Structured Settlements on September 29, 2008 (boomark / email).