Video broadcast on Lehman Brothers and AIG

In today's special edition of Speaking of Settlements I am joined by Jan Schlichtmann to discuss the amazing events of September 15th, 2008, the day in which Wall Street as we have known it for the past 70 years essentially came to an end with the bankruptcy of Lehman Brothers and the acquisition of Merrill Lynch by Bank of America.

This video gives you some of the back ground as to why this situation occurred and has resulted in a massive restructuring of the US financial markets, and what the outlook for AIG is going forward. As i've stated in the past, I have never been a big fan of AIG given it's pro-tort reform advocacy and heavy handed treatment of plaintiff structured settlement professionals in the 1990's, but the fact is that losing AIG to an insolvency or liquidation would harm our industry and shake the confidence of financial markets to such a degree that few people in the insurance industry would be untouched or unharmed by the fall out.

As I point out in the video, the assets are there to pay all claims and the life subsidiaries are in all likelihood going to be just fine. However, I've found a certain cynical and malicious pleasure among AIG bashers that is potentially harmful to the long term value of the life markets. I understand the short sellers and bitter AIG employees being upset, but the annuity professionals need to rise up above the fray a bit here and remind the trial lawyers, casualty companies and annuitants that the rules and regulations behind the quality of assets that life markets can hold and reserve requirements were changed dramatically after Executive Life. The end result is you would be hard pressed to find a life company in the settlement area that isn't able to pay it's claims and doesn't hold quality assets.

Lets not confuse, or allow our industries enemies to confuse, the vulnerable claimants who depend on these payments that the issue of Big AIG is the same as the ability of American General to honor it's payments. It's not the same issue at all but many people will seize on this opportunity to needlessly panic the uniformed. Take the time to show your clients exactly who makes their payments, how they are guaranteed and the protections that exist to make sure they continue to recieve them.

The "any thing but a structure" crowd will be running at this issue hard. Be prepared to answer them with facts and calm reassurance.

Posted on September 16, 2008 .