By Kenny Chee

POLICYHOLDERS of American International Assurance (AIA) heaved a collective sigh of relief on hearing that the insurer's American- based parent company has been given a lifeline of US$85 billion (S$122 billion) by the United States Federal Reserve.

The Fed's bailout of American International Group (AIG) came amid fears of a worldwide financial crisis that could result if AIG collapsed from its losses.

While there were no known figures on how many Singapore AIA clients decided to keep their policies after the Fed's move, an AIA agent in Singapore told my paper yesterday that the rescue has calmed many of his clients.

"Starting yesterday, about 80 to 90 per cent of my clients have not talked about terminating their policies. They do not think their policies are in jeopardy," said the agent, in his 20s, who declined to be named.

Information-technology analyst Arianty, 26, who declined to give her full name, was one policyholder who felt more assured.

"I will be keeping my investment-linked policies with AIA as I'll be making losses if I withdraw them now," she told my paper.

However, some are still worried about AIG's troubles.

A self-employed policyholder, who wanted to be known only as Ms Lee, cancelled an investment- linked policy to limit her losses.

"AIG's reputation is gone as its credit rating has been downgraded," said the 32-year-old, linking AIG's woes with AIA.

Yesterday, AIA continued to assure its policyholders, saying that its parent company will not reduce the capital of any of its subsidiaries or tap into its Asian operations for liquidity.

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