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FINANCIAL SERVICES: INSURANCE
Crisis strengthens Manulife's hand in AIG bid
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October 7, 2008
ROME -- The chances of Manulife Financial Corp. winning parts of American International Group Inc. are rising sharply as the credit crisis hurts the ability of rival insurers to knock the Canadian company out of the picture, industry sources and analysts said.
NOTE: MANULIFE IS A WELL KNOWN COMPANY.
Manulife and other insurers are expected to bid for AIG divisions as early as this week, they said. The American insurance giant is under pressure to sell businesses quickly to repay an $85-billion (U.S.) Federal Reserve loan that spared it from bankruptcy last month.
An insurance source said Manulife has been working hard on the AIG file and could end up with big chunks of AIG's Asian or American businesses.
Analysts agreed. "We have expected Manulife to be an aggressive bidder and nothing we heard on the AIG conference call on Friday leads us to believe otherwise," Colin Devine, managing director in New York of Citigroup Investment Research, said in an interview. "Manulife could take a quantum leap here and replace AIG as the global insurance stock to own."
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Dominic D'Alessandro, the Manulife CEO who steps down next spring, did not return a phone call seeking comment.
During the AIG conference call, Edward Liddy, the company's new CEO, said the company would have "clear bias" for selling off businesses to companies with strong ratings, balance sheets and brand names.
Manulife appears to meet those requirements. The insurance subsidies of Manulife, North America's largest insurer by market value, carry a rare triple-A rating from Standard & Poor's. Its financial position is strong and, through John Hancock, the big American insurer it bought in 2003, it has a well-known brand name in the United States.
Manulife's share price has held up relatively well during the financial crisis. Its shares trade at about two times book value, compared with half that, or less, among some of its rivals. By comparison, ING Groep NV, the Dutch insurance and banking company, traded yesterday at about $21, or about $6 less than its book value. "We don't believe there are many bidders out there poised to bid against Manulife," Mr. Devine said.
Manulife has not said which AIG businesses it would like to own, though the American operations, especially the defined contribution retirement and 401 (k) pension divisions, would be high on its wish list, analysts said. The life and annuity business of AIG's American Life Insurance Co. (ALICO) would also appeal to Manulife. ALICO is a stand-alone insurer that operates in 55 countries, including Japan and South Asia, and had premiums and deposits of $18-billion and assets of $100-billion, in June.
Mr. Liddy said AIG wants to sell its domestic U.S. life insurance operations and chunks of is foreign life insurance business. It wants to keep the U.S. property and casualty operation and overseas general insurance. "The preference is to sell [the U.S. life business] all as one unit," he said. "We have a preference to have larger transactions because they can be done with some speed and will attract larger buyers."
The punitive interest rate on the AIG rescue loan - 8.5 percentage points above the three-month London interbank offered rate (Libor) - makes swift assets sales a priority. As of last Wednesday, AIG had drawn down more than $63-billion of the $85-billion credit line. After the conference call, S&P revised its watch on AIG's credit to "negative." S&P analyst Rodney Clark said the amount borrowed "is much larger than we previously anticipated" and that the asset-sale plans "exceed our expectations."
The price tag on AIG's life, annuity and pension business in the United States would probably be no less than its statutory book value of about $18-billion. Some estimates have put the value of AIG's U.S. life insurance operations at $24-billion. Manulife's market value is about $46-billion.
Research firms have said that Warren Buffett's Berkshire Hathaway, Allstate, MetLife, AXA and Canada's Sun Life are among the potential other bidders for AIG's businesses. AIG has enlisted JPMorgan and Blackstone Group to co-ordinate the sales effort.
MANULIFE (MFC)
Close: $32.75 (U.S.); down $1.30
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Thursday, October 9, 2008
Wednesday, October 8, 2008
ANHEUSER-BUSCH AND TEAMSTERS REACH TENTATIVE AGREEMENT
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Hang Seng Index slumps 5.5% to 15,888.47 in early minutes
Anheuser-Busch and Teamsters Reach Tentative Agreement
Proposed Five-Year Contract Provides Wages Among the Best in American Industry
Last update: 5:56 p.m. EDT Oct. 7, 2008
ST. LOUIS, Oct 07, 2008 /PRNewswire-FirstCall via COMTEX/ -- Anheuser-Busch, Inc. (BUD:
Anheuser-Busch Companies, Inc
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Last: 62.85-0.24-0.38%
4:03pm 10/07/2008
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BUD 62.85, -0.24, -0.4%) and the International Brotherhood of Teamsters have reached a tentative agreement on a five-year contract covering more than 5,000 full-time employees at the company's 12 U.S. breweries.
The tentative agreement includes all local, national and economic issues and provides the company with flexibility to maintain maximum efficiency in its operations, while recognizing the contributions of Teamster brewery workers. The Brewery and Soft Drink Workers Conference, the Teamsters National Bargaining Committee and all locals unanimously have recommended the agreement for ratification. A vote is expected in November.
Terms of the agreement include wage increases in each year of the contract, excellent health benefits for employees and their families, increased life insurance coverage and the renewal of the company's contractual commitment to keep all 12 U.S. breweries open for the life of the agreement. When ratified, the contract will be binding, and will remain in place once the company completes its planned merger with InBev.
NOTE: AUGUST A. BUSCH IS A WELL RESPECTED PERSONALITY IN ANHEUSER-BUSCH COs.
"We're pleased to have an agreement that gives our employees generous pay and benefits, while helping our company prepare for the future," said August A. Busch IV, president and chief executive officer of Anheuser-Busch Cos. Inc. "Reaching an early agreement reflects the strong relationship Anheuser-Busch and the Teamsters have built over the years. Anheuser-Busch values the hard work and ingenuity of our employees, and we're proud to offer a compensation package for our workers that ranks among the best in American industry."
The tentative agreement includes a total wage increase of 15 percent over the life of the agreement.
The company will continue to provide excellent health benefits to employees for the life of the contract, while also containing health-care cost inflation for the company. The tentative agreement also includes Flexible Spending Accounts, and an annual wellness incentive program offering a potential annual benefit of $250 for employees who complete a health risk assessment and appointment with their primary care physician.
The tentative agreement also calls for Anheuser-Busch to provide life insurance benefit amounts, in company-administered plans, of $100,000 for employees, $50,000 for spouse and $10,000 for dependents.
The current contract expires Feb. 29, 2009. Ratification of the agreement on the first vote will result in a $1,000 bonus for employees. The company's contractual commitment to keep all 12 U.S. breweries open for the life of the contract also is contingent on first-vote ratification.
Based in St. Louis, Anheuser-Busch is the leading American brewer, holding a 48.5 percent share of U.S. beer sales. The company brews the world's largest-selling beers, Budweiser and Bud Light. Anheuser-Busch also owns a 50 percent share in Grupo Modelo, Mexico's leading brewer, and a 27 percent share in China brewer Tsingtao, whose namesake beer brand is the country's best-selling premium beer. Anheuser-Busch ranked No. 1 among beverage companies in FORTUNE Magazine's Most Admired U.S. and Global Companies lists in 2008. Anheuser-Busch is one of the largest theme park operators in the United States, is a major manufacturer of aluminum cans and one of the world's largest recyclers of aluminum cans. For more information, visit http://www.anheuser-busch.com.
SOURCE Anheuser-Busch, Inc.
http://www.anheuser-busch.com
Copyright (C) 2008 PR Newswire. All rights reserved End of Story
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Anheuser-Busch and Teamsters Reach Tentative Agreement - MarketWatch
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Hang Seng Index slumps 5.5% to 15,888.47 in early minutes
Anheuser-Busch and Teamsters Reach Tentative Agreement
Proposed Five-Year Contract Provides Wages Among the Best in American Industry
Last update: 5:56 p.m. EDT Oct. 7, 2008
ST. LOUIS, Oct 07, 2008 /PRNewswire-FirstCall via COMTEX/ -- Anheuser-Busch, Inc. (BUD:
Anheuser-Busch Companies, Inc
News, chart, profile, more
Last: 62.85-0.24-0.38%
4:03pm 10/07/2008
Delayed quote data
Add to portfolio
Analyst
Create alert
Insider
Discuss
Financials
Sponsored by:
BUD 62.85, -0.24, -0.4%) and the International Brotherhood of Teamsters have reached a tentative agreement on a five-year contract covering more than 5,000 full-time employees at the company's 12 U.S. breweries.
The tentative agreement includes all local, national and economic issues and provides the company with flexibility to maintain maximum efficiency in its operations, while recognizing the contributions of Teamster brewery workers. The Brewery and Soft Drink Workers Conference, the Teamsters National Bargaining Committee and all locals unanimously have recommended the agreement for ratification. A vote is expected in November.
Terms of the agreement include wage increases in each year of the contract, excellent health benefits for employees and their families, increased life insurance coverage and the renewal of the company's contractual commitment to keep all 12 U.S. breweries open for the life of the agreement. When ratified, the contract will be binding, and will remain in place once the company completes its planned merger with InBev.
NOTE: AUGUST A. BUSCH IS A WELL RESPECTED PERSONALITY IN ANHEUSER-BUSCH COs.
"We're pleased to have an agreement that gives our employees generous pay and benefits, while helping our company prepare for the future," said August A. Busch IV, president and chief executive officer of Anheuser-Busch Cos. Inc. "Reaching an early agreement reflects the strong relationship Anheuser-Busch and the Teamsters have built over the years. Anheuser-Busch values the hard work and ingenuity of our employees, and we're proud to offer a compensation package for our workers that ranks among the best in American industry."
The tentative agreement includes a total wage increase of 15 percent over the life of the agreement.
The company will continue to provide excellent health benefits to employees for the life of the contract, while also containing health-care cost inflation for the company. The tentative agreement also includes Flexible Spending Accounts, and an annual wellness incentive program offering a potential annual benefit of $250 for employees who complete a health risk assessment and appointment with their primary care physician.
The tentative agreement also calls for Anheuser-Busch to provide life insurance benefit amounts, in company-administered plans, of $100,000 for employees, $50,000 for spouse and $10,000 for dependents.
The current contract expires Feb. 29, 2009. Ratification of the agreement on the first vote will result in a $1,000 bonus for employees. The company's contractual commitment to keep all 12 U.S. breweries open for the life of the contract also is contingent on first-vote ratification.
Based in St. Louis, Anheuser-Busch is the leading American brewer, holding a 48.5 percent share of U.S. beer sales. The company brews the world's largest-selling beers, Budweiser and Bud Light. Anheuser-Busch also owns a 50 percent share in Grupo Modelo, Mexico's leading brewer, and a 27 percent share in China brewer Tsingtao, whose namesake beer brand is the country's best-selling premium beer. Anheuser-Busch ranked No. 1 among beverage companies in FORTUNE Magazine's Most Admired U.S. and Global Companies lists in 2008. Anheuser-Busch is one of the largest theme park operators in the United States, is a major manufacturer of aluminum cans and one of the world's largest recyclers of aluminum cans. For more information, visit http://www.anheuser-busch.com.
SOURCE Anheuser-Busch, Inc.
http://www.anheuser-busch.com
Copyright (C) 2008 PR Newswire. All rights reserved End of Story
Comtex
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5:22 PM 10/7/08 Alcoa profit halved as aluminum prices slide
4:50 PM 10/7/08 U.S. stocks fall sharply for fifth day; S&P 500 at five-year low
3:08 PM 10/7/08 Consumers pay down debt for first time in 10 years
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* U.S. stocks fall sharply for fifth day; S&P 500 at five-year low
* Citigroup to slash its wholesale mortgage business
* Candidates clash over economy in second debate
* Picking trading spots on the road less traveled
* Monday probably didn't constitute capitulation
* Commonwealth Bank buys Australia units of HBOS
* Munis thrive in troubled market
* Why Europe will take longer than U.S. to bounce back
* McCain's bold new mortgage plan isn't new
* Citigroup to slash its wholesale mortgage business
* Oil service shares slide more than broad market in ugly day
* Don't call it a bailout
* Israel atones -- but not for financial irresponsibility
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Anheuser-Busch and Teamsters Reach Tentative Agreement - MarketWatch
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Friday, September 19, 2008
FORMER ALLSTATE CHIEF PICKED BY GOVERNMENT TO RUN AIG
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Former Allstate Chief Picked by Government to Run AIG (Update3)
By David Mildenberg and Erik Holm
Enlarge Image/Details
Sept. 17 (Bloomberg) -- Former Allstate Corp. Chief Executive Officer Edward Liddy was hired by the U.S. government to run American International Group Inc. as part of a plan to avert a collapse of the country's largest insurer.
Liddy, 62, helped oversee the spinoffs of Allstate, Discover Financial Services, real estate broker Coldwell Banker Corp. and securities brokerage Dean Witter when he was an executive at Sears Roebuck & Co. He replaces Robert Willumstad, who's leaving after the government took control of New York-based AIG.
NOTE: LIDDY IS A WELL RESPECTED PERSONALITY IN THE INSURANCE INDUSTRY.
At AIG, Liddy, who ran Allstate from 1999 until 2006, will need to stem record losses tied to mortgages and preside over the sale of units to raise cash to repay a federal loan of as much as $85 billion. AIG plummeted 97 percent this year in New York Stock Exchange trading, erasing more than $125 billion of market value.
Liddy, a partner at private-equity firm Clayton Dubilier & Rice Inc., is ``a platinum-level insurance executive and the ideal appointment for a company that needs to evaluate the value of its core insurance operations,'' said New York Insurance Superintendent Eric Dinallo in an interview. ``He has great financial services expertise.''
Treasury Secretary Henry Paulson made the decision to oust Willumstad, 63, who became AIG's CEO in June, and informed him of the news yesterday. Liddy was elected as a director of Goldman Sachs Group Inc. in 2003, when Paulson was CEO of the New York- based investment bank.
Hurricane Katrina
AIG spokesman Nicholas Ashooh declined to comment about the management change, and Liddy and Willumstad weren't available for comment. When Willumstad took control of AIG three months ago, he promised to complete a strategic review by Sept. 25. AIG unraveled before he was able to unveil his plan.
Liddy joined Allstate in 1994 from Sears to oversee the spinoff. He was named CEO five years later and led the insurer in 2005 when hurricanes Katrina, Rita and Wilma cost Allstate more than $5 billion combined.
Liddy began an effort that continued under current Allstate CEO Tom Wilson to scale back the coverage of homes in catastrophe-prone regions. In Louisiana, the insurer stopped covering wind damage in some parishes, restricted the sale of new policies, and bought extra reinsurance to protect itself against losses exceeding $500 million in the state.
Liddy is ``a brilliant financial strategist,'' said Robert Pike, a retired chief administrative officer who reported to Liddy at Northbrook, Illinois-based Allstate, the largest publicly traded U.S. home and auto insurer. ``He's able to take an extraordinary amount of data and synthesize it, probably better than anybody I ever met.''
Planes to Factories
Allstate sells home, auto and life insurance, almost exclusively in the U.S., and mostly to individual customers. AIG, which operates in more than 100 countries, competes with Allstate and also covers planes, shipping and factories, and protects commercial property owners against terrorist attacks. AIG sold financial guaranties on fixed-income investments that led to $25 billion of writedowns over the past year.
``Liddy is a respected insurance executive, whose experience and expertise will be tested given the challenging situation he has been given,'' said Tom Kersting, an analyst at Edward Jones in St. Louis.
Liddy does have experience in mortgage insurance, a business that lost money for AIG for four straight quarters and is expected to be unprofitable this year. He served as chairman of PMI Group Inc., the No. 2 U.S. mortgage insurer, about 14 years ago. Mortgage insurers reimburse lenders when borrowers fail to pay their debts.
NOTE: AIG IS ONE OF THE TOP COMPANIES IN THE INSURANCE INDUSTRY.
Shaking Up Management
Shortly before Liddy took over as Allstate CEO, he told a meeting of 200 managers that a number of them wouldn't be around in a year, according to a May 2005 Crain's Chicago Business story that Pike confirmed. Liddy ended up ousting executives including the finance chief and investment officers.
``Ed looked around and picked those people he felt would add value and complement their culture, and I think he did pretty damn well,'' said Pike, who worked at Allstate for 35 years.
Allstate gained about 9.5 percent a year in New York trading under Liddy, beating the Standard & Poor's 500 Index during his tenure.
``Ed Liddy led Allstate from being a typical average performance subsidiary of Sears to becoming one of the best- capitalized and best-managed insurers in the U.S.,'' said Cliff Gallant, an analyst at KBW Inc. in New York. ``He is known for integrity and strong leadership.''
Allstate ranks second to policyholder-owned State Farm Mutual Automobile Insurance Co. of Bloomington, Illinois, in the U.S. home and auto insurance market.
New Jersey Roots
Liddy grew up in New Jersey and worked at Ford Motor Co. before moving to Chicago in 1981 to join G.D. Searle & Co., where Donald Rumsfeld, later the secretary of defense, was CEO. He moved to Sears in 1988 to work under CEO Edward Brennan.
Liddy has an undergraduate degree from Catholic University of America and an M.B.A. from George Washington University, both in Washington, D.C. He was previously chairman of Northwestern Memorial Healthcare, which operates one of Chicago's largest hospital systems.
``Unlike a lot of CEOs, Ed doesn't take on a regal air and he's not pompous in any way,'' Pike said.
To contact the reporters on this story: David Mildenberg in Charlotte, North Carolina at dmildenberg@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.
Last Updated: September 17, 2008 12:32 EDT
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Former Allstate Chief Picked by Government to Run AIG (Update3)
By David Mildenberg and Erik Holm
Enlarge Image/Details
Sept. 17 (Bloomberg) -- Former Allstate Corp. Chief Executive Officer Edward Liddy was hired by the U.S. government to run American International Group Inc. as part of a plan to avert a collapse of the country's largest insurer.
Liddy, 62, helped oversee the spinoffs of Allstate, Discover Financial Services, real estate broker Coldwell Banker Corp. and securities brokerage Dean Witter when he was an executive at Sears Roebuck & Co. He replaces Robert Willumstad, who's leaving after the government took control of New York-based AIG.
NOTE: LIDDY IS A WELL RESPECTED PERSONALITY IN THE INSURANCE INDUSTRY.
At AIG, Liddy, who ran Allstate from 1999 until 2006, will need to stem record losses tied to mortgages and preside over the sale of units to raise cash to repay a federal loan of as much as $85 billion. AIG plummeted 97 percent this year in New York Stock Exchange trading, erasing more than $125 billion of market value.
Liddy, a partner at private-equity firm Clayton Dubilier & Rice Inc., is ``a platinum-level insurance executive and the ideal appointment for a company that needs to evaluate the value of its core insurance operations,'' said New York Insurance Superintendent Eric Dinallo in an interview. ``He has great financial services expertise.''
Treasury Secretary Henry Paulson made the decision to oust Willumstad, 63, who became AIG's CEO in June, and informed him of the news yesterday. Liddy was elected as a director of Goldman Sachs Group Inc. in 2003, when Paulson was CEO of the New York- based investment bank.
Hurricane Katrina
AIG spokesman Nicholas Ashooh declined to comment about the management change, and Liddy and Willumstad weren't available for comment. When Willumstad took control of AIG three months ago, he promised to complete a strategic review by Sept. 25. AIG unraveled before he was able to unveil his plan.
Liddy joined Allstate in 1994 from Sears to oversee the spinoff. He was named CEO five years later and led the insurer in 2005 when hurricanes Katrina, Rita and Wilma cost Allstate more than $5 billion combined.
Liddy began an effort that continued under current Allstate CEO Tom Wilson to scale back the coverage of homes in catastrophe-prone regions. In Louisiana, the insurer stopped covering wind damage in some parishes, restricted the sale of new policies, and bought extra reinsurance to protect itself against losses exceeding $500 million in the state.
Liddy is ``a brilliant financial strategist,'' said Robert Pike, a retired chief administrative officer who reported to Liddy at Northbrook, Illinois-based Allstate, the largest publicly traded U.S. home and auto insurer. ``He's able to take an extraordinary amount of data and synthesize it, probably better than anybody I ever met.''
Planes to Factories
Allstate sells home, auto and life insurance, almost exclusively in the U.S., and mostly to individual customers. AIG, which operates in more than 100 countries, competes with Allstate and also covers planes, shipping and factories, and protects commercial property owners against terrorist attacks. AIG sold financial guaranties on fixed-income investments that led to $25 billion of writedowns over the past year.
``Liddy is a respected insurance executive, whose experience and expertise will be tested given the challenging situation he has been given,'' said Tom Kersting, an analyst at Edward Jones in St. Louis.
Liddy does have experience in mortgage insurance, a business that lost money for AIG for four straight quarters and is expected to be unprofitable this year. He served as chairman of PMI Group Inc., the No. 2 U.S. mortgage insurer, about 14 years ago. Mortgage insurers reimburse lenders when borrowers fail to pay their debts.
NOTE: AIG IS ONE OF THE TOP COMPANIES IN THE INSURANCE INDUSTRY.
Shaking Up Management
Shortly before Liddy took over as Allstate CEO, he told a meeting of 200 managers that a number of them wouldn't be around in a year, according to a May 2005 Crain's Chicago Business story that Pike confirmed. Liddy ended up ousting executives including the finance chief and investment officers.
``Ed looked around and picked those people he felt would add value and complement their culture, and I think he did pretty damn well,'' said Pike, who worked at Allstate for 35 years.
Allstate gained about 9.5 percent a year in New York trading under Liddy, beating the Standard & Poor's 500 Index during his tenure.
``Ed Liddy led Allstate from being a typical average performance subsidiary of Sears to becoming one of the best- capitalized and best-managed insurers in the U.S.,'' said Cliff Gallant, an analyst at KBW Inc. in New York. ``He is known for integrity and strong leadership.''
Allstate ranks second to policyholder-owned State Farm Mutual Automobile Insurance Co. of Bloomington, Illinois, in the U.S. home and auto insurance market.
New Jersey Roots
Liddy grew up in New Jersey and worked at Ford Motor Co. before moving to Chicago in 1981 to join G.D. Searle & Co., where Donald Rumsfeld, later the secretary of defense, was CEO. He moved to Sears in 1988 to work under CEO Edward Brennan.
Liddy has an undergraduate degree from Catholic University of America and an M.B.A. from George Washington University, both in Washington, D.C. He was previously chairman of Northwestern Memorial Healthcare, which operates one of Chicago's largest hospital systems.
``Unlike a lot of CEOs, Ed doesn't take on a regal air and he's not pompous in any way,'' Pike said.
To contact the reporters on this story: David Mildenberg in Charlotte, North Carolina at dmildenberg@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.
Last Updated: September 17, 2008 12:32 EDT
Email this article Printer friendly format
Advertisement: Do stocks outperform bonds? Learn about the power of an all-bond portfolio.
Sponsored links
More News
* Morgan Stanley's Mack Said to Consider Merger With Wachovia, Several Banks
* Stocks in U.S. Tumble as Lending Seizes Up on Concern More Banks Will Fail
* WaMu Removes Obstacle to Possible Takeover as Fishman Speeds Sale of Bank
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Thursday, September 18, 2008
INSURANCE CUSTOMERS OF AIG SHOULDN'T WORRY YET
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Insurance customers of AIG shouldn't worry yet
Insurance industry; AIG insurance policy, annuity holders shouldn't worry
September 17, 2008: 05:27 PM EST
NEW YORK (Associated Press) - The financial problems at American International Group Inc. may be causing you great concern today if you hold an AIG life, health, home or auto insurance policy, or have an annuity with the company.
Insurance industry officials and analysts say there's little for policyholders to worry about today, but they say they're watching the situation carefully.
NOTE: AIG IS ONE OF THE TOP COMPANIES IN THE INSURANCE INDUSTRY.
They're keeping a close eye, because the potential impact in the United States for insurance policy holders is significant. The Insurance Information Institute says AIG ranks in the top 10 of insurance companies in fixed annuities sold through banks. Fixed annuities guarantee the principal and fixed payments to the buyer for a specified period of time, usually until death. AIG also ranks among the top writers of auto insurance, commercial insurance and life insurance. It led the nation in fixed annuities sold through banks, writing more than $5 billion in 2007. AIG also led in commercial insurance writing $24 billion in policies in 2007.
Here are the answers to some key questions about where AIG's insurance businesses stand and how it may effect you.
Q: What is going to happen to the insurance businesses owned by AIG?
A: The infusion of $85 billion into AIG offers financial stability so the company will have time to decide which assets or business segments it should sell and to whom. It hasn't been disclosed whether the insurance segment, or portions of it, would be sold.
"We believe the insurance subsidiary to be financially sound and continues to be sound today," said analyst Joyce Sharaf of A.M. Best Co., one of the nation's main insurance ratings companies. She said Wednesday that AIG holds major insurance businesses that "are enviable franchises that could be sold in whole or in part."
A.M. Best analyst Marc Steinberg said he's continuing to review AIG's ratings and analysts are closely monitoring the situation as it unfolds. Analysts believe, however, that insurance policyholders are safe for now, he said.
Insurance regulators in New York, which have regulatory oversight over New York-based AIG, and the National Association of Insurance Commissioners said the company's insurance operations remain solvent and can pay claims.
Insurance companies in the United States are closely regulated by government agencies established by the states in which they are based.
The company released a statement Tuesday evening which said: "Policyholders of AIG companies around the world can rest assured that AIG's commitments will continue to be honored."
---
Q: Should I be worried if I have health or life insurance policies with AIG and what if I have a retirement annuity?
You should first keep in mind that AIG continues to operate, it has not filed for bankruptcy protection and has not been declared insolvent. Even if the insurance portion of the business was for some reason declared insolvent, there are protections in place similar to the FDIC insurance that backs up your bank deposits.
Life and health insurance, and products like annuities are covered by insurance guarantee associations that have been established in every state, said Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations. The associations step in when insurance regulators in your state declare an insurance company insolvent and it's placed in receivership.
The level of coverage may vary by state, but every state association provides withdrawal and cash value coverage for annuities of at least $100,000. About a dozen states offer up to $300,000 and a few others offer up to $500,000.
Life insurance policies are backed up with at least $300,000 in life insurance death benefits and $100,000 in cash surrender or withdrawal value. States offer at least $100,000 in health insurance policy benefits.
In the past 25 years more than $20 billion in coverage benefits have been provided by the state associations for policyholders and annuity clients of dissolved insurance companies. In that time, the associations have provided protection for more than two million policyholders and worked on more than 60 multistate insolvencies.
---
Q: What should I do if I hold a homeowner's or car insurance policy with AIG?
Every state, the District of Columbia, Puerto Rico and the Virgin Islands have established property guarantee funds similar to those established to protect against losses in life and health insurance.
Guaranty funds generally pay the amount of coverage stipulated by the policy or $300,000, whichever is less. Each state has a law that places a cap on the coverage and some have higher amounts. New York, for example, has a property/casualty cap of $1 million.
Most state guarantee funds pay all of their state's workers' compensation benefits.
Since the late 1960s, the property/casualty guaranty system has paid out about $21 billion in claims on behalf of insolvent insurers. About $10 billion disbursed in the last six years, largely because of the frequent and severe hurricanes that have struck the Gulf Coast.
Since 1976, there have been about 600 insolvencies of property and casualty insurers. There are 2,648 property casualty insurers licensed to do business in the United States.
___
On the Net:
A.M. Best Co.: http://www.ambest.com
National Conference of Insurance Guaranty Funds: http://www.ncigf.org
National Organization of Life and Health Insurance Guaranty Associations: http://www.nolhga.com/ Top of page
More Markets
Another thrashing for stocks
Bank merger talks heat up
Bailouts - The new rate cuts
The Hot List
100 best places to start a business
Diesel: The truck stops here
'You're working for gas now'
Top Stories
Stocks slump on AIG, housing
Oil jumps as investors flee Wall Street
Google, GE to develop green energy technology
Why this (still) isn't a recession
SEC puts 'naked' short sellers on notice
Money
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Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© 2008 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy
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* : Time reflects local markets trading time. † - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer
Copyright © 2008 BigCharts.com Inc. All rights reserved. Please see our Terms of Use.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
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Historical, current end-of-day data, and splits data provided by Interactive Data Pricing and Reference Data.
Fundamental data provided by Hemscott.
SEC Filings data provided by Edgar Online Inc..
Earnings data provided by FactSet CallStreet, LLC.
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TRADING
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Insurance customers of AIG shouldn't worry yet
Insurance industry; AIG insurance policy, annuity holders shouldn't worry
September 17, 2008: 05:27 PM EST
NEW YORK (Associated Press) - The financial problems at American International Group Inc. may be causing you great concern today if you hold an AIG life, health, home or auto insurance policy, or have an annuity with the company.
Insurance industry officials and analysts say there's little for policyholders to worry about today, but they say they're watching the situation carefully.
NOTE: AIG IS ONE OF THE TOP COMPANIES IN THE INSURANCE INDUSTRY.
They're keeping a close eye, because the potential impact in the United States for insurance policy holders is significant. The Insurance Information Institute says AIG ranks in the top 10 of insurance companies in fixed annuities sold through banks. Fixed annuities guarantee the principal and fixed payments to the buyer for a specified period of time, usually until death. AIG also ranks among the top writers of auto insurance, commercial insurance and life insurance. It led the nation in fixed annuities sold through banks, writing more than $5 billion in 2007. AIG also led in commercial insurance writing $24 billion in policies in 2007.
Here are the answers to some key questions about where AIG's insurance businesses stand and how it may effect you.
Q: What is going to happen to the insurance businesses owned by AIG?
A: The infusion of $85 billion into AIG offers financial stability so the company will have time to decide which assets or business segments it should sell and to whom. It hasn't been disclosed whether the insurance segment, or portions of it, would be sold.
"We believe the insurance subsidiary to be financially sound and continues to be sound today," said analyst Joyce Sharaf of A.M. Best Co., one of the nation's main insurance ratings companies. She said Wednesday that AIG holds major insurance businesses that "are enviable franchises that could be sold in whole or in part."
A.M. Best analyst Marc Steinberg said he's continuing to review AIG's ratings and analysts are closely monitoring the situation as it unfolds. Analysts believe, however, that insurance policyholders are safe for now, he said.
Insurance regulators in New York, which have regulatory oversight over New York-based AIG, and the National Association of Insurance Commissioners said the company's insurance operations remain solvent and can pay claims.
Insurance companies in the United States are closely regulated by government agencies established by the states in which they are based.
The company released a statement Tuesday evening which said: "Policyholders of AIG companies around the world can rest assured that AIG's commitments will continue to be honored."
---
Q: Should I be worried if I have health or life insurance policies with AIG and what if I have a retirement annuity?
You should first keep in mind that AIG continues to operate, it has not filed for bankruptcy protection and has not been declared insolvent. Even if the insurance portion of the business was for some reason declared insolvent, there are protections in place similar to the FDIC insurance that backs up your bank deposits.
Life and health insurance, and products like annuities are covered by insurance guarantee associations that have been established in every state, said Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations. The associations step in when insurance regulators in your state declare an insurance company insolvent and it's placed in receivership.
The level of coverage may vary by state, but every state association provides withdrawal and cash value coverage for annuities of at least $100,000. About a dozen states offer up to $300,000 and a few others offer up to $500,000.
Life insurance policies are backed up with at least $300,000 in life insurance death benefits and $100,000 in cash surrender or withdrawal value. States offer at least $100,000 in health insurance policy benefits.
In the past 25 years more than $20 billion in coverage benefits have been provided by the state associations for policyholders and annuity clients of dissolved insurance companies. In that time, the associations have provided protection for more than two million policyholders and worked on more than 60 multistate insolvencies.
---
Q: What should I do if I hold a homeowner's or car insurance policy with AIG?
Every state, the District of Columbia, Puerto Rico and the Virgin Islands have established property guarantee funds similar to those established to protect against losses in life and health insurance.
Guaranty funds generally pay the amount of coverage stipulated by the policy or $300,000, whichever is less. Each state has a law that places a cap on the coverage and some have higher amounts. New York, for example, has a property/casualty cap of $1 million.
Most state guarantee funds pay all of their state's workers' compensation benefits.
Since the late 1960s, the property/casualty guaranty system has paid out about $21 billion in claims on behalf of insolvent insurers. About $10 billion disbursed in the last six years, largely because of the frequent and severe hurricanes that have struck the Gulf Coast.
Since 1976, there have been about 600 insolvencies of property and casualty insurers. There are 2,648 property casualty insurers licensed to do business in the United States.
___
On the Net:
A.M. Best Co.: http://www.ambest.com
National Conference of Insurance Guaranty Funds: http://www.ncigf.org
National Organization of Life and Health Insurance Guaranty Associations: http://www.nolhga.com/ Top of page
More Markets
Another thrashing for stocks
Bank merger talks heat up
Bailouts - The new rate cuts
The Hot List
100 best places to start a business
Diesel: The truck stops here
'You're working for gas now'
Top Stories
Stocks slump on AIG, housing
Oil jumps as investors flee Wall Street
Google, GE to develop green energy technology
Why this (still) isn't a recession
SEC puts 'naked' short sellers on notice
Money
Privacy Policy
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© 2008 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy
Home Portfolio Calculators Contact Us Newsletters Podcasts RSS Mobile Widgets Press Center Site Map User Preferences
Advertise with Us Magazine Customer Service Download Fortune Lists Reprints Career Opportunities Special Sections Conferences Business Leader Council
Live Quotes automatically refresh, but individual equities are delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET.
* : Time reflects local markets trading time. † - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer
Copyright © 2008 BigCharts.com Inc. All rights reserved. Please see our Terms of Use.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. All Times are ET.
Intraday data provided by Interactive Data Real-Time Services and subject to the Terms of Use.
Historical, current end-of-day data, and splits data provided by Interactive Data Pricing and Reference Data.
Fundamental data provided by Hemscott.
SEC Filings data provided by Edgar Online Inc..
Earnings data provided by FactSet CallStreet, LLC.
Wednesday, September 17, 2008
AIG FATE HAS BIG IMPACT ON THIS SIDE OF THE HUDSON
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AIG Fate Has Big Impact on This Side of the Hudson
Posted on: Wednesday, 17 September 2008, 15:00 CDT
By RICHARD NEWMAN, STAFF WRITER
Beleaguered American International Group Inc., the largest U.S. insurer, is also a big player in New Jersey.
The New York-based financial services giant is the top underwriter of commercial lines in New Jersey and ranks eighth in auto insurance based on premium dollars.
"If AIG goes under, that's going to send ripples throughout the New Jersey and New York region," said James Hughes, dean of Rutgers University's Edward J. Bloustein School of Planning and Public Policy.
NOTE: HUDGES IS A WELL RESPECTED PERSONALITY IN THE INSURANCE INDUSTRY.
The federal government announced an $85 billion bailout of AIG on Tuesday night. It is one of the world's biggest financial services players, and a collapse would have had consequences for financial firms around the globe. AIG insures some of the largest assets in the world and does business in more than 100 countries.
More than a dozen AIG subsidiaries are licensed to operate in New Jersey, but the only one with headquarters in this state is auto insurer American International Insurance of New Jersey. By AIG's standards it is a comparatively small operation, covering 76,000 vehicles and generating $80 million in annual premiums.
The auto insurance unit is "well-capitalized," said Ed Rogan, a spokesman for the Department of Banking and Insurance, and AIG's holding company has not requested permission to access that capital. "We would not approve such a thing if in anyway it would impact consumers," Rogan said.
NOTE: ROGAN IS A WELL RESPECTED PERSONALITY IN AUTO INSURANCE INDUSTRY.
An AIG spokesman declined to comment.
An organization of state insurance regulators issued a statement Tuesday to address AIG policyholders' concerns.
"If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims," Sandy Praeger, president of the National Association of Insurance Commissioners, said in the statement. "Our job is to ensure that they continue to have the ability to pay."
Insurance regulators in New York and Pennsylvania are working with the holding company to give it access to capital in subsidiaries domiciled in those states.
"The holding company is at issue right now," said Roger Schmelzer, president of the National Conference of Insurance Guaranty Funds in Indianapolis. "The holding company could go bankrupt, and for policyholders it would be business as usual."
AIG shares plunged 21 percent Tuesday, to $3.75 a share.
Other insurers could benefit from AIG's woes. Warren-based Chubb Corp. rose $6.53, or 14 percent, to $55.05, and Newark's Prudential Financial Inc. climbed $6.64, or 9.2 percent, to $79.18.
***
American International Group in New Jersey
Market
Line Ranking* Share*
Commercial 1 10%
Automobile 8 4.7%
Homeowner 19 1.3%
*2007
Source: Insurance Information Institute
***
E-mail: newman@northjersey.com
(c) 2008 Record, The; Bergen County, N.J.. Provided by ProQuest LLC. All rights Reserved.
Source: Record, The; Bergen County, N.J.
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AIG Fate Has Big Impact on This Side of the Hudson
Posted on: Wednesday, 17 September 2008, 15:00 CDT
By RICHARD NEWMAN, STAFF WRITER
Beleaguered American International Group Inc., the largest U.S. insurer, is also a big player in New Jersey.
The New York-based financial services giant is the top underwriter of commercial lines in New Jersey and ranks eighth in auto insurance based on premium dollars.
"If AIG goes under, that's going to send ripples throughout the New Jersey and New York region," said James Hughes, dean of Rutgers University's Edward J. Bloustein School of Planning and Public Policy.
NOTE: HUDGES IS A WELL RESPECTED PERSONALITY IN THE INSURANCE INDUSTRY.
The federal government announced an $85 billion bailout of AIG on Tuesday night. It is one of the world's biggest financial services players, and a collapse would have had consequences for financial firms around the globe. AIG insures some of the largest assets in the world and does business in more than 100 countries.
More than a dozen AIG subsidiaries are licensed to operate in New Jersey, but the only one with headquarters in this state is auto insurer American International Insurance of New Jersey. By AIG's standards it is a comparatively small operation, covering 76,000 vehicles and generating $80 million in annual premiums.
The auto insurance unit is "well-capitalized," said Ed Rogan, a spokesman for the Department of Banking and Insurance, and AIG's holding company has not requested permission to access that capital. "We would not approve such a thing if in anyway it would impact consumers," Rogan said.
NOTE: ROGAN IS A WELL RESPECTED PERSONALITY IN AUTO INSURANCE INDUSTRY.
An AIG spokesman declined to comment.
An organization of state insurance regulators issued a statement Tuesday to address AIG policyholders' concerns.
"If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims," Sandy Praeger, president of the National Association of Insurance Commissioners, said in the statement. "Our job is to ensure that they continue to have the ability to pay."
Insurance regulators in New York and Pennsylvania are working with the holding company to give it access to capital in subsidiaries domiciled in those states.
"The holding company is at issue right now," said Roger Schmelzer, president of the National Conference of Insurance Guaranty Funds in Indianapolis. "The holding company could go bankrupt, and for policyholders it would be business as usual."
AIG shares plunged 21 percent Tuesday, to $3.75 a share.
Other insurers could benefit from AIG's woes. Warren-based Chubb Corp. rose $6.53, or 14 percent, to $55.05, and Newark's Prudential Financial Inc. climbed $6.64, or 9.2 percent, to $79.18.
***
American International Group in New Jersey
Market
Line Ranking* Share*
Commercial 1 10%
Automobile 8 4.7%
Homeowner 19 1.3%
*2007
Source: Insurance Information Institute
***
E-mail: newman@northjersey.com
(c) 2008 Record, The; Bergen County, N.J.. Provided by ProQuest LLC. All rights Reserved.
Source: Record, The; Bergen County, N.J.
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Sunday, September 14, 2008
NC INSURANCE COMMISSIONER ORDERS LOWER AUTO RATES
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Associated Press
NC insurance commissioner orders lower auto rates
Associated Press 09.11.08, 5:48 PM ET
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RALEIGH, N.C. -
North Carolina State Insurance Commissioner Jim Long on Thursday rejected an industry request for an almost 13 percent increase in auto rates and has ordered a reduction instead.
Long signed an order requiring a 16.1 percent reduction in private passenger auto rates and an 11.7 percent reduction in motorcycle liability rates.
NOTE: LONG IS A WELL RESPECTED STATE INSURANCE COMMISSIONER.
The reductions are effective Jan. 1.
The North Carolina Rate Bureau's request for a 12.9 percent increase was the subject of rate hearings in July and August.
Long said he decided the requested increase "just wasn't warranted. It's the largest increase they've requested in almost 15 years. I was surprised by the request, especially since last year the bureau filed for no change."
During the hearings, the department's attorney argued that the market for auto insurance had not changed significantly since 2007.
Rate Bureau general manager Ray Evans said the board was "surprised at the magnitude of the decrease. We don't think that's the appropriate decision."
The board meets next week and will decide whether to accept Long's decision or appeal it, he said.
Department experts said the bureau mistakenly included claims arising from the North Carolina Reinsurance Facility when determining its proposed rate increase. The facility insures riskier drivers, and bureau rates don't apply to them.
Instead, the facility files a separate rate proposal using its own claims data. But Evans said the facility also insures some drivers whom it believes should be included in its rate computations.
If the bureau appeals Long's decision, then companies can raise their rates and hold the difference in escrow. If the bureau lost the appeal, companies would have to refund the money in escrow, plus interest.
Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
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Associated Press
NC insurance commissioner orders lower auto rates
Associated Press 09.11.08, 5:48 PM ET
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RALEIGH, N.C. -
North Carolina State Insurance Commissioner Jim Long on Thursday rejected an industry request for an almost 13 percent increase in auto rates and has ordered a reduction instead.
Long signed an order requiring a 16.1 percent reduction in private passenger auto rates and an 11.7 percent reduction in motorcycle liability rates.
NOTE: LONG IS A WELL RESPECTED STATE INSURANCE COMMISSIONER.
The reductions are effective Jan. 1.
The North Carolina Rate Bureau's request for a 12.9 percent increase was the subject of rate hearings in July and August.
Long said he decided the requested increase "just wasn't warranted. It's the largest increase they've requested in almost 15 years. I was surprised by the request, especially since last year the bureau filed for no change."
During the hearings, the department's attorney argued that the market for auto insurance had not changed significantly since 2007.
Rate Bureau general manager Ray Evans said the board was "surprised at the magnitude of the decrease. We don't think that's the appropriate decision."
The board meets next week and will decide whether to accept Long's decision or appeal it, he said.
Department experts said the bureau mistakenly included claims arising from the North Carolina Reinsurance Facility when determining its proposed rate increase. The facility insures riskier drivers, and bureau rates don't apply to them.
Instead, the facility files a separate rate proposal using its own claims data. But Evans said the facility also insures some drivers whom it believes should be included in its rate computations.
If the bureau appeals Long's decision, then companies can raise their rates and hold the difference in escrow. If the bureau lost the appeal, companies would have to refund the money in escrow, plus interest.
Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
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Saturday, September 13, 2008
How to optimize your auto insurance
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How to optimize your auto insurance
* Story Highlights
* Don't just buy the cheapest auto insurance possible, expert says
* Carry a high deductible to bring the price of the premiums down
* Consider dropping physical damage coverage on older cars to save money
* Buy insurance that protects you against motorists who don't have insurance
* Next Article in Living »
By Tom Torbjornsen
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New Cars, Used Cars, Kelley Blue Book Values at AOL Autos
(AOL Autos) -- We keep our cars tuned up, but what about our automobile insurance? Recently I had a chat with an insurance broker. The topic of conversation? Smart insurance buying.
The hospital bill from the people you hit can be expensive, so buy as high a liability limit as you can afford.
The hospital bill from the people you hit can be expensive, so buy as high a liability limit as you can afford.
Note: Torbjornsen is a respected personality in the insurance industry.
After our conversation I realized that the biggest mistake an uninformed consumer makes is to regard insurance coverage as a commodity... as generic as the oil purchased for the car.
An insurance policy is a personalized service contract that provides coverage for you and your family in the event of an accident. When you read your auto policy the language is anything but simple. And everyone knows it's not inexpensive!
To regard auto insurance as a "necessary evil" to be purchased as cheap as possible is a foolish and ignorant approach to this very necessary aspect of driving an automobile.
Based on our conversation, here's how to get the biggest "bang for your buck" when purchasing automobile insurance:
Buy as high a liability limit as you can afford
This is the coverage that protects you in the event you get into an accident and are accused of negligence. Remember, a lawsuit can be brought against you despite your culpability - and damages sought in today's court actions seldom fall below six figures.
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Often the spouse of the injured party seeks more than $100,000 for "loss of services." This doesn't include the dollars requested for the injured party. Question... how far would your present policy go in responding to this kind of a suit?
Be realistic, not ridiculous in determining the amount of liability you need. Most insurance companies will write liability coverage up to at least $500,000. Adding an umbrella liability policy in the amount of one, two, three million (or more depending on your situation) will go a long way in protecting you.
Only buying $50,000 coverage? See how long that lasts you when you get the hospital bill from the party you hit for three or four weeks... oh, and I forgot about the "loss of services."
Buy supplemental uninsured motorist coverage
This is the coverage that protects you in the event you are involved in an accident with an uninsured motorist, or a motorist with low limits of liability insurance coverage. AOL Autos: 10 cheapest cars in U.S.
Let's say that you're involved in an accident resulting in serious injury to you, and possibly your passengers. No matter what the amount a court might award, if the negligent party has inadequate liability coverage and few assets, your award is of little value.
The Supplemental Uninsured Motorist portion of your policy provides the liability coverage the other driver should have had, up to the limit you carry on your policy. AOL Autos: Safest cars -- sedans
Carry high deductibles on your physical damage
Higher liability as well as Supplemental Uninsured Motorist coverage means higher premiums. A good way to help pay for this is to carry as high a deductible on your collision and comprehensive as you can reasonably afford. This brings the price of the premiums down. AOL Autos: Most-popular fuel-efficient cars
Consider dropping physical damage on older vehicles
This is not an easy call. Typically, an insurance company charges less for collision and comprehensive on an older vehicle. In general, when a vehicle is six years old or more, it's worth considering this change.
Things to take into consideration when trying to make this call are value of the vehicle, its condition, how much you drive it, and the policy charge for the coverage. At some point the charge for the coverage will not be worth what you could collect in the event of a loss.
Never skimp on liability coverage in order to pay for less important physical damage coverage on a vehicle that is worth less than what the policy would pay in the event of a loss. AOL Autos: Best and worst resale value cars
Deal with an agent that has your confidence
Make sure your agent gives you the service you need. Ask questions about coverage under different scenarios and ask for recommendations. Deal with a full-service agency; one that offers all the products you need and has the staff to make the complex insurance marketplace bearable. AOL Autos: Fuel-efficient used SUVs and Crossovers
People spend money on maintaining their cars and ignore their insurance coverage. When you get in an accident and have the other party's lawyers breathing down your neck is not the time to find out that your insurance coverage was inadequate.
Get with your agent and tune up your insurance policy now!!!
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September 3, 2008 -- Updated 1324 GMT (2124 HKT)
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How to optimize your auto insurance
* Story Highlights
* Don't just buy the cheapest auto insurance possible, expert says
* Carry a high deductible to bring the price of the premiums down
* Consider dropping physical damage coverage on older cars to save money
* Buy insurance that protects you against motorists who don't have insurance
* Next Article in Living »
By Tom Torbjornsen
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New Cars, Used Cars, Kelley Blue Book Values at AOL Autos
(AOL Autos) -- We keep our cars tuned up, but what about our automobile insurance? Recently I had a chat with an insurance broker. The topic of conversation? Smart insurance buying.
The hospital bill from the people you hit can be expensive, so buy as high a liability limit as you can afford.
The hospital bill from the people you hit can be expensive, so buy as high a liability limit as you can afford.
Note: Torbjornsen is a respected personality in the insurance industry.
After our conversation I realized that the biggest mistake an uninformed consumer makes is to regard insurance coverage as a commodity... as generic as the oil purchased for the car.
An insurance policy is a personalized service contract that provides coverage for you and your family in the event of an accident. When you read your auto policy the language is anything but simple. And everyone knows it's not inexpensive!
To regard auto insurance as a "necessary evil" to be purchased as cheap as possible is a foolish and ignorant approach to this very necessary aspect of driving an automobile.
Based on our conversation, here's how to get the biggest "bang for your buck" when purchasing automobile insurance:
Buy as high a liability limit as you can afford
This is the coverage that protects you in the event you get into an accident and are accused of negligence. Remember, a lawsuit can be brought against you despite your culpability - and damages sought in today's court actions seldom fall below six figures.
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Often the spouse of the injured party seeks more than $100,000 for "loss of services." This doesn't include the dollars requested for the injured party. Question... how far would your present policy go in responding to this kind of a suit?
Be realistic, not ridiculous in determining the amount of liability you need. Most insurance companies will write liability coverage up to at least $500,000. Adding an umbrella liability policy in the amount of one, two, three million (or more depending on your situation) will go a long way in protecting you.
Only buying $50,000 coverage? See how long that lasts you when you get the hospital bill from the party you hit for three or four weeks... oh, and I forgot about the "loss of services."
Buy supplemental uninsured motorist coverage
This is the coverage that protects you in the event you are involved in an accident with an uninsured motorist, or a motorist with low limits of liability insurance coverage. AOL Autos: 10 cheapest cars in U.S.
Let's say that you're involved in an accident resulting in serious injury to you, and possibly your passengers. No matter what the amount a court might award, if the negligent party has inadequate liability coverage and few assets, your award is of little value.
The Supplemental Uninsured Motorist portion of your policy provides the liability coverage the other driver should have had, up to the limit you carry on your policy. AOL Autos: Safest cars -- sedans
Carry high deductibles on your physical damage
Higher liability as well as Supplemental Uninsured Motorist coverage means higher premiums. A good way to help pay for this is to carry as high a deductible on your collision and comprehensive as you can reasonably afford. This brings the price of the premiums down. AOL Autos: Most-popular fuel-efficient cars
Consider dropping physical damage on older vehicles
This is not an easy call. Typically, an insurance company charges less for collision and comprehensive on an older vehicle. In general, when a vehicle is six years old or more, it's worth considering this change.
Things to take into consideration when trying to make this call are value of the vehicle, its condition, how much you drive it, and the policy charge for the coverage. At some point the charge for the coverage will not be worth what you could collect in the event of a loss.
Never skimp on liability coverage in order to pay for less important physical damage coverage on a vehicle that is worth less than what the policy would pay in the event of a loss. AOL Autos: Best and worst resale value cars
Deal with an agent that has your confidence
Make sure your agent gives you the service you need. Ask questions about coverage under different scenarios and ask for recommendations. Deal with a full-service agency; one that offers all the products you need and has the staff to make the complex insurance marketplace bearable. AOL Autos: Fuel-efficient used SUVs and Crossovers
People spend money on maintaining their cars and ignore their insurance coverage. When you get in an accident and have the other party's lawyers breathing down your neck is not the time to find out that your insurance coverage was inadequate.
Get with your agent and tune up your insurance policy now!!!
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