2007 0611 - OTS - Office of Thrift Supervison Holding Company Report Of Examination of AIG - 52p1
(p37) - The following table lists AIG's significant intra-group transactions (IGT) as of March 31, 2007.
$6.1 billion in Loans: From American General Life Insurance Co to AIG Financial Products Corp
1995 - GAO - Insurance Regulation: Observations on the Receivership of Monarch Life Insurance Company. (Letter Report, 03/22/95, GAO/GGD-95-95). - 22p
(p1) - Real estate investment losses of the parent holding company endangered Monarch Life’s solvency and led to the regulatory takeover.
The holding company pledged its Monarch Life stock as collateral on a loan, exposing the insurer to possible takeover by the holding company’s creditors
(p1) - The regulatory examination completed in January 1990 did not detect the risks facing Monarch Life because examiners did not assess whether the holding company could repay money borrowed from the insurer.
(p2) - Also, a holding company can draw on its resources to provide capital infusions and financial support for a troubled insurance subsidiary.
However, interaffiliate transactions may pose risks to an insurer’s solvency.
(p2) - Moreover, financial problems within a holding company structure may adversely affect an insurer.
An overleveraged holding company cannot provide financial support for its insurer and may attempt to divert funds from the insurer to assist ailing noninsurance affiliates.
(p3) - Abusive interaffiliate transactions have contributed to several major life insurance failures.
The Baldwin-United failure in 1983 was caused in large part by abusive interaffiliate transactions in which the holding company siphoned cash from its insurance subsidiaries.
In an investigation of the 1991 failure of Guarantee Security Life, the Permanent Subcommittee on Investigations of the Senate Committee on Governmental Affairs learned that Guarantee Security allegedly used phony investments in unreported affiliates to mask its insolvency.1
We previously testified that interaffiliate transactions drained the capital or masked the financial condition in four other failures: Executive Life of California, Executive Life of New York, First Capital, and Fidelity Bankers.