by John Darer CLU ChFC MSSC CeFT RSP CLTC
On October 26, 2020 American International Group announced that it would begin the process of separating the AIG Life & Retirement division from AIG with the goal to establish two independent, market-leading companies. The process is expected to last several years. If one looks to the blue books of the insurers and old A.M. Best reports one can see that American General has paid billions in dividends to the parent company. If some of that money can now be kept at American General, it has to be a positive that should favorably impact pricing to consumers.
Who is AIG Life and Retirement?
AIG Life & Retirement consists of four operating segments: Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. It includes the following major U.S. life insurance companies: American General Life Insurance Company (established 1926); The Variable Annuity Life Insurance Company (1955); and The United States Life Insurance Company in the City of New York (1850).
Life insurance and annuities, including structured settlement annuities and funding agreements, are issued by American General Life Insurance Company (AGL), Houston, TX except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life). The latter is the oldest stock life insurance company in the United States and was acquired by American General in 1997. American General was acquired by AIG in 2001. Western National, acquired by American General in 1997 and Variable Annuity Life Insurance Company acquired by American General in 1967 were also underwriters of structured settlement annuities in the past.
On May 11, 2001 the Chicago Tribune reported that "the race for scale in U.S. life insurance stepped up Friday, as global insurance giant American International Group reached an agreement to acquire fellow insurer American General Corp. for about $23 billion in stock". The deal was reported by the Chicago Tribune as "the largest ever in insurance" and "would create the largest U.S. insurer by far, and sends a signal to all other U.S. life insurers and annuity sellers that they have to get much bigger to compete.
Recent Innovation by American General
American General has recently introduced a number of periodic payment innovations to the structured settlement market
- Interest Rate Linked Structured Settlements (IRLSS). Here American General creates an opportunity to get into a structured settlement now, but create certainty in the form of add on future income streams at then prevailing rates if they higher than a certain benchmark on a future measuring date(s)
- Non Qualified Assignment Facility with Domestic Assignment Company and Ability to Defer Here a fabulous opportunity to create customized and predictable stream(s) of future payments using a Funding Agreement issued by American General, or United States Life (for New York cases). An option to defer without having to go offshore.
These structured settlement and settlement planning products are only available through licensed insurance agents appointed through the structured settlement distribution channel of the underwriting companies.
Beware Structured Settlement Secondary Market Cacodemons
It's Halloween all year round for the hellhounds and vultures of the structured settlements secondary market. They want your structured settlement candy. The incorrigible fiends drool for your large financial candy bars at bite size prices. Naturally when such an announcement is made, you can expect fake news and speculation from those looking to induce gullible people into to a pennies on the dollar financial blood letting. One company, whose founder Robert Shapiro is now in jail, deliberately targeted AIG annuitants during the 2008 financial crisis. Annuitants that stayed the course received their payments.