The parent company may be under the pump but it’s business as usual for the foreign-based subsidiaries of AIG.

AIG Australia and AIG New Zealand have both moved to assure customers that the near-bankruptcy of parent company operations will not affect trade Down Under.

The parent company has confirmed the crisis will not affect units of its Foreign General segment, which include AIG Australia and AIG NZ.

Even before the US Federal Reserve stepped in with US$85 billion ($102.5 billion), AIG had assured policyholders the subsidiaries would not be affected by its desperate search for new cash.

“AIG continues to pursue alternatives to increase short-term liquidity in the parent company,” the company said just hours before the bailout was confirmed. “Those plans do not include any effort to reduce the capital of any of its subsidiaries or to tap into Asian operations for liquidity.”

AIG Australia CEO Chris Townsend told insuranceNEWS.com.au the company faces “challenging” times but strict adherence to Australian regulations has ensured the protection of local operations.

“We have separate assets, ring-fenced from our parent,” he said.

Mr Townsend says that in line with APRA requirements the company has “ample assets to cover all liabilities”.

He says net assets for the Australian organisation are currently worth $260 million, and include a $725 million investment portfolio. “Despite what happened this week, our assets in Australia remain exactly as they were last week, last month and last year.”

Mr Townsend moved to quash any rumour that the Australian business would be part of a sell-off. “I can categorically say we are not for sale,” he said, noting that the New York office would be looking to divest only “non-core” insurance assets.

It’s a similar story for the major Australian commercial insurers. Both QBE and Suncorp were quick to release share market statements describing their respective exposures to AIG and fallen investment bank Lehman Brothers as “not material”.

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