Philip Aee is a patient man. Patient and very worried. Holding a piece of paper saying he was the 1,600th person in line, the 60-year-old retiree had been waiting for three hours on September 17 outside the offices of AIG's Singapore subsidiary, AIA. The sun beat down on the sunflower-yellow facade of the company's fifty-year-old flagship building in the heart of Singapore's office district, around the corner from AIA's new offices. "I never thought this would happen to AIG," said Aee, shaking his head in amazement.
Aee was well aware of the $85 billion lifeline extended to troubled insurance giant AIG by the U.S. Federal Reserve several hours before. But the news did little to calm his nerves. A day after Asian markets took a beating as investors dumped stocks in the wake of the Lehman Bros. collapse and Merrill Lynch buyout, anxiety over U.S. financial companies was still spreading. By mid-afternoon, a crowd of roughly 150 people still swarmed the entrance of AIA Singapore Ltd., many trying to pull out their funds or cancel their insurance policies. They shrugged off the blistering heat as well as assurances from its general manager Mark O'Dell, that the company has "a strong, well-positioned business in Singapore." With over four thousand agents and two million policies in force in this city-state of 4.6 million, AIG is one of Singapore's largest insurance operators. Its pervasive presence in the small nation underscores the insurance giant's global reach and the global consequences of an unfolding failure of confidence by its far-flung customers. That reach was one of the key reasons why the U.S. government appeared to reluctantly agree to an AIG bailout on September 16 and stepped in to save the insurance giant, whose global balance sheet of assets and liabilities topped $1 trillion. "Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression," money manager Michael Lewitt wrote in the New York Times.
The Monetary Authority of Singapore, the government's financial regulator, tried to reassure AIG's customers that there would be no such event. The "financial resources" of AIG's Singapore-based insurance subsidiary currently met its requirements, regulators stated in a press release. But so far, consumers in this global market have been far from comforted. Standing in the crowd on Wednesday, Karen Foo, 29, said she was only dimly aware of the underlying assets in the investment trust her insurance policy is linked to. She was determined to sell at the earliest opportunity. "I'm a little worried," Foo said with a tight smile.
Number 1600 echoed her sentiment. When Aee, who holds an AIG-linked trust worth roughly $7000, was told about the assurance by AIG's Singapore management that his investment was protected, he replied skeptically, "I'm not so sure." He said if he managed to get inside the insurer's besieged offices which looked like it could take him another 10 hours he planned to "cash out" his entire investment. "There's nothing like cash in your hands," he said.