HONOLULU (KHNL) - It's the federal government to the rescue as it throws the world's largest insurance company American insurance Group (AIG) a life-line.
AIG needed $40 billion to keep from collapsing and today, the federal government decided to loan it $85 billion in exchange for a stake in the company.
It's the third largest auto insurer in the nation, including more than a 100,000 customers in Hawaii.
While the company recovers from its crisis, local executives say it will be business as usual for customers.
About a 1,000 calls come into AIG's Hawaii customer service office a day. Concerns usually center around issues like car and life insurance policies, but news of AIG's financial problems is causing fear.
"Customers wondering about their policies and whether or not the safety of their product with us is secure and we've been giving them assurances of course they are," said AIG Hawaii President & CEO Robin Campaniano.
The Federal Reserve Bank's loan of $85 billion to AIG affords the federal government 80% control of the company. State insurance commissioner J.P. Schmidt says the move relieves pressure and lets AIG sell off assets to get it back in financial shape. Credit crunch to mortgage meltdown, experts blame the economy.
" Tougher to get an auto loan that affects automobile sales, tougher to get a credit card that affects sales in the general retail and as a result everyone is becoming more conservative," said Insurance Commissioner J.P. Schmidt.
"We're all stunned by the failings of banks, security companies, strong names that we thought would never disappear like Lehman and Merrill-Lynch, who knows what's on the horizon," said Campaniano.
Battered by billions of dollars in losses this past year, AIG's investment side is struggling, but it's insurance sector is still sound and stable, as the company continues its commitment to its customers.
Predatory loans is a problem experts say Hawaii saw coming.