Joseph Olanyo
26 September 2008
Despite the turmoil in global markets that has shaken financial giants in the US, it is business as usual at American Insurance Group (AIG) Uganda, a member company of AIG Inc.
The insurance giants contend that AIG's holding companies together with AIG Uganda Ltd continue to remain adequately capitalised and fully capable of meeting its obligations to policy holders including payment of claims.
"Our local solvency margin and capital of AIG Uganda Ltd continues to be healthy with surplus capital of Shs12.8 billion" AIG Uganda Managing Director Alex Wanjohi and AIG's Chief Operating Officer Africa said in a joint statement on September 17. "In addition our treaty facilitates with our parent company's regulated insurance subsidiaries continue to remain undiminished" it added.
Mr Wanjohi said insurance policies written by AIG Uganda are direct obligations of the locally registered company
Scrambling to break the grip of a worsening global credit crisis, the Federal Reserve stepped up action last week pumping billions into financial markets in the US and abroad.
The Federal Reserve Bank of New York, in two operations, injected $55 billion into temporary reserves in the United States, a move aimed to help ease a strained financial system in danger of freezing up.
At the start of last week Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it could not go it alone anymore, found help in the arms of Bank of America. Insurance giant American International Group was given an $85 billion emergency loan from the Fed in a deal allowing the government to take control of the company. The manoeuvre takes place as Fed Chairman Ben Bernanke battles the worst financial crisis since the Great Depression.
In the last few days, the American financial system has been badly shaken as bad bets on dodgy mortgage-backed securities claimed more Wall Street giants. The cash infusion was designed to help ease a spike in lending rate between banks.
A sharp rise in such borrowing costs makes banks reluctant to lend to each other, worsening already tight credit conditions. AIG Inc has announced that they have received an $85 billion secured revolving credit to address the liquidity issues of AIG Inc.
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