Central Bank says no need for panic: Algico says it is not at risk

Published: Wednesday September 17, 2008

Central Bank governor Ewart Williams said yesterday that no local banks or financial institutions are at risk as a result of the meltdown involving several big US investment banks over the last few days.

He said people in T&T have no reason to panic over the unfolding situation.

He said a survey conducted by the Central Bank’s Fiduciary Department over the last two days concluded that “there would be very little if any impact” on the local financial system.

Williams said the survey included all banks and insurance companies, “but we have not been able to identify any significant exposure that we should be concerned about.”

There had been special concern about the local insurance company, American Life and General Insurance Company Limited (Algico), which is a subsidiary of the giant US corporation, American Insurance Group (AIG), described as the largest insurance company in the world.

AIG is on the brink of collapse and is seeking to raise as much as US$75 billion to avoid failure.

But Algico yesterday issued a statement saying that the local company was not at risk.

Williams said that because of Algico’s structure, its assets were self-financing and largely based on local policyholders.

He said Algico’s assets were invested locally and it was not a situation where its operations were heavily dependent on support from its head office in the US.

“So we do not expect any big impact.”

In a statement, Algico’s managing director and chief executive officer, Mark Hansen, said “Algico, its assets, its employees and its policyholders remain in a strong position despite whatever turbulence is affecting AIG and the US financial system.”

Hansen said Algico is a T&T company.

He said, “100 per cent of our insurance policies are direct obligations with T&T and follow strong local regulations. We are well-capitalised and financially solid. 90 per cent of our investment portfolio is based in T&T with the remaining 10 per cent in the European market. Of our local investments, 80 per cent are invested in T&T Government securities and the remaining 20 per cent in local real estate and bank deposits. We have no AIG stock shares in our investment portfolio.

“Secondly, our ability to pay claims and our commitment to solid underwriting practices remain undiminished.”

Addressing Algico stakeholders, policyholders, brokers, agents and staff, Hansen said Algico is “well-positioned to rise above these challenges and protect our policyholders and fulfill its obligations.”


Source: Trinidad Guardian Newspapers
http://www.guardian.co.tt/business1.html