Canada's Sun Life says exposure to AIG minimal

After confirming earlier this week that it holds about $350 million worth of bonds and derivatives instruments in collapsed US investment bank Lehman Brothers, Canada’s Sun Life Financial Inc. said it also had exposures with the bailed-out American International Group (AIG).

In a report to the Securities and Exchange Commission of both the Philippines and the United States, Sun Life said it had roughly $315 million worth of exposures in AIG and a number of its subsidiaries.

With the AIG parent company, it held securities worth $88 million. With three AIG subsidiaries, it held $227 million worth of bonds.

“Sun Life Financial continues to monitor the implications of the United States Federal Reserve Board’s statement concerning AIG,” it said in the report.

Earlier this week, Sun Life admitted it has C$334 million worth of Lehman bonds but this represents less than 0.4 percent of the group’s invested assets.

At the end of the second quarter, the Sun Life group of companies held total assets under management worth C$413 billion.

Net earnings stood at C$1.05 billion in the first semester of the year.

Meanwhile, Sun Life Financial in the Philippines remains unaffected by the fiasco since it is not allowed by local regulators to make any investments outside of the country.

“The Insurance Code allows insurers to merely make domestic investments mostly in government securities and blue chip companies,” Michael Manuel, Sun Life Financial Philippines (SLFP) chief investment officer said in a television interview.

Majority of Sun Life Financial Philippines’ life, pre-need and mutual fund assets are invested locally. It currently provides over 1.1 million Filipinos with products and services to help them meet their financial needs.

The US government has decided to save AIG through a $85-billion loan package that will give the state a 79.9-percent equity stake in the insurance giant.

There are reports that AIG will have to tap into its global network to serve as collateral for the bail-out package.

The Philippine American Life and General Insurance Co. (Philamlife) is the principal subsidiary of AIG in the Philippines.