Sunday, October 5, 2008
AIG and the First Amendment
"State insurance regulators are warning against against trying to frighten customers into replacing policies from troubled American Insurance Group Inc. ... Meanwhile, some large U.S. banks have suspended sales of AIG annuities amid the ratings downgrade last week of some of AIG's more than 70 state-regulated insurance subsidiaries, although the ratings generally remain strong. ... 'A number of banks have removed AIG from their provider list because of the ratings downgrade, but no one that I have spoken to believes the insurance companies are in any kind of financial jeopardy,' said Michael White, president of Michael White Associates LLC, a bank insurance consulting firm in Radnor, Pa. ... In New York state, insurance superintendent Eric Dinallo said his office had received complaints from AIG and other sources about poaching of its customers by agents using headlines about the company's troubles to question its solvency--a practice that is illegal in the state", my emphasis, M.P. McQueen at the WSJ, 24 September 2008.
Who does White talk to, Richard Fuld? Didn't Dinallo approve AIG's insurance subsidiaries upstreaming $20 billion to their parent on 14 September 2008? I wonder if Dinallo ever heard of the First Amendment (FA)? Does he want that "law" tested? Who is Dinallo kidding? I've had clients who hold AIG annuities ask me about them. Does Dinallo think I have no FA rights to speak? Suppose an insurance agent believes in good faith that AIG's insurance subsidiaries are likely to fail, no matter what ratings they have? Shouldn't he tell his clients sell their annuities? That this may make AIG's life tougher is just too bad from where I sit. Full disclosure: I sell no financial products.