Aon Testifies Before Congress on Proposal to Guarantee Troubled and Illiquid Financial Instruments
18 Novembre 2008 - 3:30PM
PR Newswire (US)
CHICAGO, Nov. 18 /PRNewswire-FirstCall/ -- In testimony today
before the House Committee on Financial Services in Washington,
D.C., D. Cameron Findlay, executive vice president and general
counsel of Aon Corporation, urged the U.S. Department of Treasury
to address a primary cause of the current U.S. liquidity problem --
the hundreds of billions of dollars of illiquid assets that reside
on the ledgers of America's financial institutions. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) Testifying
on behalf of the Council of Insurance Agents and Brokers, Findlay
said, "Insurance plays a fundamental role in the operation of the
world's financial markets. Any coordinated effort to combat the
turbulence roiling those markets should consider the potential for
an insurance component." Findlay added, "As long as the problems
created by depressed valuation of these assets in the capital
markets remain, no matter the volume of capital infusions,
financial institutions will have a difficult time playing their
critical role in the functioning of our economy. "That is why the
Council of Insurance Agents and Brokers and its members believe
that the Department of Treasury should vigorously exercise the
authority granted to it in Section 102 of the Emergency Economic
Stabilization Act, and establish a program to insure the value of
troubled and illiquid financial instruments." In response to an
October 2008 request for comments from the Treasury Department, Aon
submitted a plan to strengthen America's economy by insuring
troubled assets. This plan, drawing on the precedents established
in dealing with other seemingly insurmountable risks, such as the
Price-Anderson Nuclear Industry Indemnity Act, would implement an
insurance program that uses a combination of risk retention, risk
pooling and government backstop liquidity that would benefit
taxpayers, financial institutions saddled with illiquid assets, and
homeowners. "Such a plan, largely self-funding and drawing
inspiration from the Price- Anderson Act, involves the sharing of
risk by participants in an entity that we refer to as the asset
stabilization pool," Findlay said. "Participants in the asset
stabilization pool would have a portion of the principal and
interest from specific, illiquid assets guaranteed." The Aon
program would insulate an asset holder from the decline in value
resulting from the non-payment, or expected non-payment, of
principal and interest. Asset holders would be required to retain a
small percentage of the shortfall of principle and interest,
subject to a maximum annual payout per asset. Asset holders would
be reimbursed from the pool for a shortfall in principal or
interest once such amounts exceed their retention in a single year.
To receive the benefit of such coverage, participating institutions
would have to pay premiums into the pool. Each year, actuaries
would calculate the level of premium needed to fund guarantee
payments for the following year. Premium payments to the pool would
be capped by the government. In the event that payments from the
pool exceeded premium collections, the government would lend the
pool the funds needed to make good on the guarantees. The
government would be reimbursed by premium collections in following
years. The Treasury Department could calibrate liquidity by
speeding up or slowing down the collection of premiums. A copy of
the Aon proposal to the Treasury Department and testimony before
the House Financial Services Committee is available at
http://aon.mediaroom.com/ About Aon Aon Corporation (NYSE:AOC) is
the leading global provider of risk management services, insurance
and reinsurance brokerage, and human capital consulting. Through
its 36,000 colleagues worldwide, Aon readily delivers distinctive
client value via innovative and effective risk management and
workforce productivity solutions. Our industry-leading global
resources, technical expertise and industry knowledge are delivered
locally through more than 500 offices in more than 120 countries.
Aon was named the world's best broker by Euromoney magazine's 2008
Insurance Survey. In 2008, Aon ranked highest on the Business
Insurance ranking of the world's largest insurance brokers based on
commercial retail, wholesale, reinsurance and personal lines
brokerage revenues. Aon also was ranked by A.M. Best as the number
one insurance broker based on brokerage revenues in 2007 and 2008,
and was voted best insurance intermediary, best reinsurance
intermediary, and best employee benefits consulting firm in 2007
and 2008 by the readers of Business Insurance. For more information
on Aon, log onto http://www.aon.com/. For further information,
contact: David Prosperi 312-381-2485
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
David Prosperi of Aon, +1-312-381-2485, Web site:
http://www.aon.com/
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