Insurance Nomination law w.e.f. 1 Sep 09

With effect from 1 Sep 09, changes in the Insurance Act have made it easier to nominate your beneficiaries to receive the life insurance proceeds. The above are pages extracted from the LIA Guide to Nomination which is available at
http://www.lia.org.sg/ftpsite/guide/NOB_Guide_Sep09Eng.pdf

One important point to note is that a will executed after the date of the nomination may revoke all earlier nominations.

If in doubt, always seek professional legal advice. :)

Re-branding of AIG

Extract from a 23/3/09 Reuters article By Lilla Zuill.

Quote
A spokesman said the company had decided to replace the large AIG sign -- outside the entrance to its property-casualty offices -- as part of its plan to change that operation's name to AIU Holdings Ltd.

The AIG name has become even more tarnished in the past week, after a scandal erupted over bonuses to executives of a controversial financial products unit that caused much of the $100 billion in losses over the past year.

A rebranding to distance the giant insurer's sprawling operations across 130 countries away from the AIG name are likely to continue.

"I think the AIG name is so thoroughly wounded and disgraced that we're probably going to have to change it," Liddy told a U.S. House of Representatives subcommittee last Wednesday.

Since AIG's bailout last September, other of the company's businesses have also rebranded, in most cases returning to earlier names.
Unquote

The AIG name used to carry a lot of brand equity. It has since become pariah, with many of its units disassociating from it and dropping the use of its name. In Singapore, AHA (American Home Assurance Compnay) has decided to use its own registered name, without any more reference to its parent AIG, or rather AIU Holdings Ltd.

My view is that they should use a totally unrelated name altogether; much like the renaming of Citiraya to Centillion Environment and Recycling" here in Singapore. Now, how many people in Singapore would remember that Centillion was actually Citiraya?

Public Anger & AIG's future

(Above picture taken from Time magazine (Mar 30 2009 issue).

How will AIG conduct its insurance businesses in the face of widespread outrage and outcry?

Will individuals and companies, whether within USA or without, want to take up any more insurance policies with AIG, although a GLC ("government-linked company", as such companies are referred to in Singapore) now?

Maybe they will, if as one Peter Gumbel (a Time magazine correspondent based in Paris), writing in a commentary, suggested, "An agreement that every firm receiving taxpayers' money should pay its employees the same as other public sector workers, such as teachers. That would assuage public fury, and provide an incentive for banks and insurers in question to sort out their problems fast."

"AIG = Arrogance, Incompetence, Greed"

The waves of public anger swept both the U.S. Senate and House of Representatives as AIG's excesses brought not only distaste but incredulity as the whole world watch how the Americans conduct their businesses in supposedly "complete transparency", how these corporate geniuses used the American taxpayers' money to make 73 overnight millionaires out of extremely greedy, extremely reckless traders who brought the world's biggest insurance company to its knees within a few short years.

It is akin to having 73 Nick Leesons in one company. Nick Leeson, Rogue Trader, lost more than a billion USD and bankrupted the hundred-year-old Barings Bank, whereas these traders probably lost a trillion $, a thousand times more. He went to jail and frankly, so should they!

And all of them are probably Brits! Who knows - they might have picked up a trick or two from Leeson's autobiography "Rogue Trader".

"Fire those execs"

When the AIG execs went for a posh retreat costing US$440,000, then Democratic Presidential candidate Barack Obama said, "Fire those execs". Well, now they plan to pay US$450,000,000 to these non-performing execs who caused AIG to lose US$61,000,000,000 in the last quarter of 2008, and yet, the Obama Administration can only wring their hands and say the bonus payouts are contractual.

They have been questioning why they should reward bad performers. When a company posted the biggest loss ever in the U.S. corporate history, and yet its execs are going to be rewarded with millions, something must be seriously wrong with their corporate employment contracts and their Board of Directors who seemingly don't mind dishing out such lucrative contracts without demanding sterling performances.

I would have thought the obvious solution to this whole sorry affair would be to close down the London-based division which almost bankrupt AIG, and fire all these execs for their lousy performance, instead of pouring good taxpayers' money after bad.

Obama promises Change You Can Believe In. Have any fundamental changes been made, really?

In God we trust; all others pay cash

Even the world's top investor made "dumb" mistakes, like buying an oil & gas stock at its peak, and a couple of banking stocks which tanked. The difference is that he readily admitted and apologised to his shareholders for his errors of omissions. He didn't make excuses about the "unsatisfactory performance" or used past successes to excuse himself.

In fact, considering the difficult circumstances, he did alright, making a US$5 billion profit in 2008, instead of huge crippling losses by the top U.S. banks and motor companies.

Nevertheless, as with the plunge of stock markets worldwide, his Berkshire Hathaway share price got battered down 47% from a 52-week high of US$147,000 (there appears a gaping error on this in the ABC News article above) to $78,600 a share (last done on 27 Feb 09).

Sale of AIA?

So Bank of China and HSBC have declined to bid for 49% stake in AIA, a USD20 billion unit with operations in Asia, including Hongkong and Singapore. The sale could potentially fetch about US$10 billion. 3 bidders are left ; Prudential, Manulife and Temasek.

Now, who would pay top dollar for a 49% non-controlling stake in a company in a fire sale by a parent company in dire straits. In the 4th quarter of 2008 alone, AIG lost USD60 billion! So, even if the sale of AIA fetches $10 billion, it is hardly enough to stem the massive bleeding of AIG, unless confidence in AIG is somehow miraculously restored, and well, I just don't see it happening.

When people buy insurance, they basically want to transfer their risks to the insurer in order to have peace of mind (for individuals) or manage business risks (for companies). Who would then want to buy insurance from an insurer which is facing an uncertain future? And so long as AIG cannot bring in new business premiums, it will continue to bleed profusely.

So, in the scenario that AIG finally goes under, its 51% stake in AIA would then be put up for auction again - that I presume should be on the minds of would-be buyers of AIA.

In the event that there are no buyers, AIG will try to float the various components of AIA in IPOs probably in Singapore, Hongkong and Japan. Will the small and institutional investors then dare to bite? Well, the saga continues ...