New York Insurance Superintendent Eric Dinallo, who helped broker a Federal Reserve Board-backed $85 billion rescue of AIG, said that state-level insurance regulation helped catch financial problems far earlier than if the federal government had been in charge. Speaking at a conference of mutual insurance companies Wednesday September 30 in Philadelphia, Dinallo said the federal government could engage in the transaction because of the solvency of the underlying insurance companies. “AIG is Exhibit A for how well the system worked, not how poorly it worked,” he said, adding that the rescue of AIG presents a case against an optional federal charter for insurance regulation.

The state regulatory system “works extremely well,” and made sure the underlying insurance companies at AIG were solvent, Dinallo said.

AIG's state-domiciled insurance companies remain the secure and profitable center of the company, and made the Federal Reserve’s $85 billion bailout loan for AIG possible, said Dinallo.

AIG Shows State Regulation Worked (CNN Money 10/1/08)

October 7, 2008