2021 0225 - YPFS Lessons Learned Oral History Project: An Interview with Eric Dinallo - 19p
- 2021 0225 - Yale - YPFS Lessons Learned Oral History Project: An Interview with Eric Dinallo, Former New York State Superintendent of Insurance (2007-2009) --- [BonkNote] --- 19p
- (p7) - Dinallo: I decided that I had enough information, and enough belief in the statutory accounting, which we can talk about. Which is really part of the story. That I was going to go out there and make statements about my confidence in the insurance companies of AIG.
- Because I did believe that on a statutory accounting basis, they had more than enough assets to match their long-term liabilities on a statutory accounting basis. Not mark to market. Which Geithner to this day …
- YPFS: Can you talk a little bit more about that?
- Dinallo: When Geithner heard this, I made this joke. I don't know if I've been quoted.
- I think he thought I was explaining the Mayan calendar to him. It was so alien and so weird.
- But basically, life insurance companies have long-term liabilities, and they match it with long-term assets that are going to perform by maturing 20 years from now.
- That's why so much of the reserves are put towards basically debt, Treasuries, etc., that are highly rated.
- So that they will almost certainly, hopefully, certainly perform.
- Which means mature. You're going to get the coupon along the way, albeit a small yield.
- The volatility before maturation over the 20 years does not count.
- This is the biggest debate in insurance right now.
- Between Europe, the feds, and the United States.
- That the inter-period where there's volatility, and this is what I mean by, back with Shelby.
- They were like, "Oh my god, they're insolvent."
- I'm like, "They're not insolvent. They may be, on some reporting basis, marginally insolvent."
- 2021 - YPFS Lessons Learned Oral History Project: An Interview with Eric Dinallo - 19p
- (p17-18) - Eric Dinallo: Geithner asked about, because they're seriously considering, giving serious thought about a debtor in possession—DIP—thing for AIG.
- He's like, "What do you think?"
- I'm like, "It's a horrible idea."
- He said, "Why?
- I said, "Because while it looks possible on paper, and I get the point.,,
- If you file for bankruptcy at the holding company level, all these subsidiaries, they're going to start ...
- Some states may even require by law … that the states will seize the operating companies, because the holding company filed for bankruptcy.
- They're going to pull up the drawbridge, and go into castle mode.
- Then you're going to have a run on insurance companies."
- While I'm saying this, I swear to God, CNN is on. We took a break, and CNN was on.
- They were lining up in Singapore for, I don't know why, but at AIG's insurance company in Singapore, they were lining up.
- They were acting like a run-on-the-bank moment.
- Probably to check on their insurance policy.