Volume 12

Partners' Perspective

September 15, 2008

I wanted to take a moment to update you on the current situation with AIG, its potential impact, and our response.

We have been following the AIG results and restructuring for the past several quarters. Equity Risk Partners meets on a regular basis with AIG leadership at the local, regional, and corporate level. In some cases, we have relationships at AIG that go back decades. We are acutely aware of the situation and are monitoring every development very closely. I will be meeting personally with AIG management tomorrow for an individual briefing on the situation.

Here is what we know:

  • Your insurance policy(s) is through a statutory insurance company of AIG Commercial Insurance and/or AIG Private Client Group. These are subsidiaries of AIG, Inc.
  • The issues making the headlines reside in other subsidiaries of AIG, Inc; most notably, AIG Investments.
  • AIG Commercial Insurance has statutory surplus in excess of $26.0 billion. This surplus is regulated by the various state insurance departments and is available for policyholders. This surplus cannot be used by AIG, Inc. to satisfy liquidity issues at the parent company level.
  • In the extremely unlikely event that AIG Commercial Insurance would be unable to pay claims, policyholders with policies written through an admitted AIG Commercial Insurance subsidiary insurer receive additional protection through the guaranty fund in their respective state. This is in addition to AIG Commercial Insurance's statutory surplus.
  • AIG Commercial Insurance / AIG Private Client Group are the cornerstone businesses of AIG, Inc. As AIG looks to raise capital to meet its liquidity needs, it is very likely that AIG will shed non-core assets and return to focusing on its primary insurance business.

Here is what we are going to do:

  • We will continue to monitor all developments in real time. Every Equity Risk Partners professional is plugged in to this issue and its impact on our clients and partners.
  • Every one of your policies will be reviewed by an Equity Risk Partners professional to determine an appropriate alternative to AIG if,

    • There is further deterioration to the AIG Commercial Insurance balance sheet
    • AIG develops a response to the current situation that is unpalatable to you
    • You are uncomfortable with the "cost" of doing business with AIG going forward
  • At a minimum, we will begin your renewal process earlier than usual to allow us to seek out alternatives on your behalf and to give you time to reasonably assess the options and to make an informed decision.

This is a very unique time and we are facing an unprecedented series of events in the financial markets and the global economy. We are here for you - to answer questions, to examine alternatives, or just to talk.

Please feel free to contact me directly or any one of my Equity Risk Partners colleagues. We appreciate your time and your continued support of Equity Risk Partners.

Very truly yours,

Michael C. Marcon