My Insurance Cheap

News of the global insurer AIG’s financial meltdown was hard to ignore. Once the Federal Reserve provided an $85 billion loan package, AIG avoided bankruptcy in the short term. In exchange, AIG must pay a high interest rate on the loan (over 11%), agree to oust its CEO and give warrants that equal 80% ownership to the US federal government. The capital and liquidity crunch faced by AIG resulted in from it’s exposure to bad mortgage debt by the parent AIG holding company.

Repercussions for Policyholders

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