by Structured Settlement Watchdog®
Why has structured settlement blogger and text co-author Patrick Hindert blatantly mischaracterized the bailout of AIG as a component of a "structured settlement industry liquidity crisis" in a blog post putatively about the annual meeting of the National Association of Settlement Purchasers? The post is a very good read, in my opinion, until Hindert's squeaky "brain fart".
"Both the primary and the secondary structured settlement markets were devastated by the 2008 financial crisis which:
- Temporarily shut down asset-backed securities markets including securities backed by structured settlement payment rights.
- Created an industry liquidity crisis which resulted in:
- J.G. Wentworth, the largest secondary market company, entering bankruptcy in 2009.
- AIG, the largest primary market company, receiving a financial bailout from the U.S. government in 2008 and 2009. (emphasis ours)
- Both Wentworth and AIG have subsequently recovered and regained their respective market leadership roles".
Characterizing the AIG entity which received a bailout as a "primary market company" is misleading. The educational materials distributed by AIG's annuity issuing subsidiaries to settlement industry professionals (presumably including Pat Hindert) made the relationship between companies clear, with particular emphasis on the security of the long term promises made to structured settlement annuitants.
Neither American General Life Insurance Company, American International Life Assurance Company of New York (now United States Life Insurance Company in the City of New York) received a bailout. The structured settlement annuity issuers continued to write business, albeit at a lower volume due to public fears, both rational and irrational. Some of the irrational fears were stoked by predatory solicitation of AIG annuitants by opportunists in the structured settlement secondary market/ factoring industry. History has proven that those that got sucked into that "cash now for AIG" vortex likely made very bad decisions.