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October 23, 2012

The "Structured Settlement Industry Liquidity Crisis of 2008" Was A Misnomer

by Structured Settlement Watchdog®

Why has structured settlement blogger and seminal text co-author Patrick Hindert blatantly mischaracterized the bailout of AIG as a component of a "structured settlement industry liquidity crisis"

Hindert's missive appears in 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".

Hindert states:

 "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.
    • Both Wentworth and AIG have subsequently recovered and regained their respective market leadership roles".

Characterizing the AIG entity which received a 2008 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.

FACT: None of the AIG structured settlemnent annuity issuers received a bailout

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 shown that those that got sucked into that "cash now for AIG" vortex in 2008 likely made very bad decisions. They received pennies on the dollar at fire sale prices when calmer heads would have lost absolutely nothing.

 

Posted at 09:19 PM in AIG Bail Out 2008 | Contemporaneous Observations, Corebridge/American General Structured Settlements, Misinformation About AIG Bailout, National Association of Settlement Purchasers (NASP), Patrick Hindert Narashkeit, Structured Settlement History |

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