The biggest concern was in life insurance, because these are long-term. As people began to lose confidence in the system, many policy holders liquidated life insurance policies underwritten by AIG. However, once AIG learned it was going to be bailed out the company issued many reassuring statements, such as, “We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims,” “State regulators have done what we do best to ensure that the AIG insurance companies, and the companies they serve, were not harmed by the financial troubles of the parent company,” and “Strict solvency standards and keen financial oversight – based on conservative investment and accounting rules – continue to be the bedrock of state-based insurance regulations” (Ferris, S., 2013). If policyholders were not reassured that their claims would be paid, more people would have pulled their policies. This probably would have resulted in people putting their money in a safe at home because they would not trust a financial …show more content…
AIG’s main counterparties included: Goldman Sachs, Société Générale, Deutsche Bank, Barclays, Merrill Lynch, Bank of America, UBS, BNP Paribas, HSBC, and Calyon (Crédit Agricole) (Katz, J., 2010). The highest paid counterpart was Goldman Sachs who received $12.9 billion and Société Générale followed with $11.9 billion. Overall, ten AIG counterparties received a grand total of $72.2 billion of government funds (Katz, J., 2010). From the list above, the majority of the counterparties are overseas, which originally caused the fear of widespread systemic risk across the