SINGAPORE: For the second day hundreds of anxious policyholders lined up in the hot sun outside the Singapore offices of global insurance giant American International Group (AIG) yesterday, despite a US government bailout of the firm.

Hundreds more — some vowing to terminate their policies — were already inside the offices of AIG and its wholly-owned subsidiary, American International Assurance Company Limited (AIA). They had returned after lining up on Wednesday without getting served.

AIA in Singapore and Hong Kong said only a fraction of policyholders had canceled, and announced measures to woo back their clients.

Many in the Singapore crowd remained unmoved by an announcement from the US Federal Reserve that the US government would give an unprecedented loan of up to $85 billion to AIG in a bid to avert a global financial calamity.

“I don’t have any more confidence in this company,” a woman who gave her name as Annie said after surrendering her two policies. She said the Fed’s move made no difference to her.

An agitated businessman, Chan Foo Choong, also lined up to liquidate his family’s policies. “If anything happens, will you pay me?” he asked an AFP reporter. Others among the queue were simply seeking answers.

At least 500 customers arrived for help yesterday. Still others received queue numbers and were told to come back today.

In Hong Kong, AIG’s subsidiary said yesterday that more than 2,000 policies had been terminated by customers who feared a collapse. That number was small considering the company had written 2.2 million policies, said Derek Yung, senior vice-president and general manager of AIA for Hong Kong and Macau.

The company said it would waive readmission charges and a health declaration requirement in a bid to woo clients back.

AIA Singapore also announced that customers who surrendered their policies this week can reinstate “without penalties and submission of evidence of insurability.”

“Despite the queue at the AIA customer service center, the number of policies that have been surrendered is less than 0.1 percent of total policies in force,” the Singapore firm said in a statement.

The firm also took out a full-page advertisement in The Straits Times newspaper yesterday telling policyholders it has “more than sufficient capital and reserves to meet all obligations” and that the funds in Singapore were segregated from AIG.

AIA Hong Kong also keeps “a separate and sound book of its own,” Yung said in the southern Chinese territory.

As subsidiaries, the Asian units are essentially separate entities and most were generally subject to local regulations, said Connie Wong, a ratings analyst specializing in the insurance sector for Standard and Poor’s.

“Their assets which are backing up policyholders’ funds are subject to local regulations. Regulators are also empowered to limit transferring of assets outside the company when necessary as the HK regulator did,” she said from Hong Kong.

Wong added that, so far, the companies in Asia have good liquidity.

But she said it was too early to comment on the future of the Asian subsidiaries under the US bailout scheme, which requires some of AIG’s extensive worldwide assets to be sold.

While customers questioned their insurance company’s future, employees of the firm tried to carry on.

“Basically we are just continuing to do our job. What is there to panic about? What can we do?” one said in Singapore. AIG appeared to be in a death spiral after more than a week of panic and turmoil in financial markets that led to the failure of US investment giant Lehman Brothers and a sale of Wall Street rival Merrill Lynch.

They were all casualties in a financial crisis that grew out of troubles in the US subprime, or higher-risk, mortgage sector last year.

Tata’s reassurance

Tata business group which partners troubled insurance giant AIG in an Indian joint venture said yesterday the collaboration was insulated against financial turmoil in the United States.

The Indian group which holds the majority 74-percent stake in Tata AIG Life said the venture was “well capitalized and is subject to stringent local regulatory and capital requirements.”

“The company is governed by the Insurance Regulatory and Development Authority and our local solvency margin as at the end of August stood at over 300 percent compared to the regulatory minimum of 150 percent,” it said.

“Indian business is robust and growing,” it added.

AIG in a separate statement also tried to assure its Indian customers. “AIG believes the (rescue) loan... will protect all AIG policyholders and give sufficient time to conduct asset sales to repay the loan,” it said.

Unlike Hong Kong, where over 2,000 jittery customers terminated AIG policies, India has so far not reported any panic closures.