Brown faces the music at AIG Life

AIG Life made some powerful enemies when it announced the closure of its enhanced bond fund last month.

The fund, which was billed by the private banks that sold it as being safer than holding cash in a high street bank, now houses the frozen savings of thousands of disgruntled high-net-worth savers, including Top Gear presenter Jeremy Clarkson.

The fund was besieged by an unprecedented level of redemption requests on that fateful morning of 15 September after investors heard AIG Life’s US parent was struggling for survival.

Enter Doug Brown (pictured), the AIG Life UK general manager, who came up with a battle plan.

‘When we came in on Monday we had a heightened sensitivity around [what was happening in the US] and I gathered everybody around and said we could be in for an interesting day,’ said Brown.

After deciding to close the fund, AIG Life told investors they could apply to withdraw 50% of their money as cash from 6 October. For the remaining half of their investment, investors can either withdraw all or part of the funds from 15 December and face market reductions or they can choose to remain invested in a newly created protected fund for another three and a half years to qualify for a guaranteed return of at least the value of units on the December close date.

Brown, a Canadian, now has the unenviable task of trying to reassure advisers and policyholders over the strength of the guarantee, the timeline over which assets in the protected fund will be released and the levels of information being provided.

‘From my perspective we’ve been very fair. But it’s up to advisers and policyholders to decide on their own whether that’s enough,’ said Brown.

AIG Life marketed its enhanced fund as safe on the basis that the combination of factors that could threaten the security of the product – namely turbulent market conditions, illiquidity of the underlying assets and unprecedented levels of redemption requests – were extremely unlikely to happen.