Members of the insurance industry are taking exception to comments made by Treasury Secretary Timothy Geithner last week before the House Committee on Oversight and Government Reforms.
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In a statement, Blain Rethmeier, spokesman for the
“There has been some suggestion in recent Congressional testimony by Secretary Geithner that if AIG had been allowed to fail, the crisis would have spread to insurance companies around the world, thus implying that the property/casualty industry might have been in crisis or potentially posed a systemic risk to the broader financial system,” he said. “It is well understood that AIG’s financial problems did not originate or stem from their property/casualty insurance business. In the event that AIG’s property/casualty business had failed and needed to be dissolved, it’s our view that the existing state guaranty fund system, which relies on post-event assessments on insurers, would have been able to protect AIG’s policyholders. Property/casualty insurers are subject to stringent capital standards that focus on maintaining their financial health and strength. The guaranty fund system exists to ensure that policyholders are protected in the rare circumstance when an insurer no longer meet those standards and fails."
Separately, in a letter to legislators,