The AIG Effect: AIG on State of Distribution, Sales of Annuities, Post-Bailout

American International Group Inc. provided Bestweek with an update on the state of distribution and sales for some of its key annuities businesses in the United States.

-- How is AIG faring with banks on fixed annuities?

Western National Life Insurance Co. was initially suspended in a number of its 250 bank agencies in September 2008, said AIG spokeswoman Christina Pretto. The vast majority of Western National Life?s bank agency distributors reinstated its fixed annuities for sale in October of 2008, with just seven remaining suspended, she said. One of those bank agencies reinstated Western National Life effective Sept. 14, 2009, "and we are optimistic that we will be reinstated by two more in the fourth quarter, which will leave just four bank agencies with suspensions."

-- Is AIG back on broker-dealer shelves for sales of variable annuities?

While actively selling in a majority of distributors, the SunAmerica companies remain suspended for sales at several key distribution firms, Pretto said. Following the positive second-quarter operating results reported by AIG and its domestic life and retirement services companies, "meetings are being scheduled in the fall for firms to consider reinstatement."

-- Overall, how are sales for AIG, post-bailout?

With some of the key distributors suspending products for sale due to AIG issues, retirement services has experienced a decrease in sales over the last year, Pretto said. "However, we have maintained extremely strong relationships with all of our key distributors, including those that have suspended our sales, and expect sales levels to increase as we are reinstated with these distributors.?

For American General Life companies (domestic life), "surrender levels have stabilized, and pockets of the business have begun to show growth," Pretto said. "Like others in the industry, overall sales have been negatively impacted this past year. However, with management's clear commitment to the domestic life and retirement services businesses, we are confident that sales will begin to improve in the near term."