Costa Rica’s state insurance monopoly sought last week to calm clients worried about the fate of insurance giant American International Group (AIG), which reinsures 22 policies here and narrowly avoided bankruptcy earlier this month.
“We want to tell all Costa Ricans, and especially our clients, not to worry,” said Guillermo Constenla, president of the National Insurance Institute (INS). “The institute is financially and technically sound.”
The 22 policies, which range from fire insurance to worker compensation, belong to multinational companies and state entities, including JuanSantamaríaInternationalAirport in Alajuela, northwest of San José. If disaster struck every client at once, the total cost would be $940 million, with AIG bearing most of the burden, Constenla said.
The U.S. Federal Reserve’s $85 billion takeover of AIG calmed nerves at INS and persuaded INS to stick with AIG, which reinsures less than 1 percent of INS policies, Constenla said. Still, if AIG’s credit rating drops further, he said, INS will switch the policies to another reinsurance agency.
“We have to remain alert,” he said. “If the rating goes down, we’ll start to worry. Then the red light goes on.”
AIG’s troubles came amid a worsening global credit crisis that has led the bank Lehman Brothers to file for bankruptcy protection and the brokerage firm Merrill Lynch to seek takeover by Bank of America.