SHANGHAI AUTHORITIES ALSO DEMAND ASSURANCES FROM AIG

UNCLAS SHANGHAI 000402 SENSITIVE SIPDIS FRANCISCO FRB FOR CURRAN/GLICK; NEW YORK FRB FOR CLARK/CRYSTAL/DAWSON STATE PASS CFTC FOR OIA/GORLICK CEA FOR BLOCK USDOC FOR ITA/MAC DAS KASOFF, MELCHER AND OCEA/MCQUEEN TREASURY FOR AMB.HOLMER, WRIGHT AND TSMITH TREASURY FOR OASIA - DOHNER/HAARSAGER/CUSHMAN TREASURY FOR IMFP - SOBEL/MOGHTADER NSC FOR LOI USTR FOR STRATFORD, WINTER E.O. 12958: N/A TAGS: EFIN ECON EINV PGOV PREL CH SUBJECT: SHANGHAI AUTHORITIES ALSO DEMAND ASSURANCES FROM AIG REF: SHANGHAI 399 (SBU) According to a Shanghai-based American International Group (AIG) General Insurance Company China high level official, the Shanghai Municipal Financial Service Office requested a detailed status report on Thursday, September 18. The summons was lodged a day earlier and came on the heels of the request for accounting from the China Insurance Regulatory Commission (CIRC) in Beijing on Tuesday September 16 (reftel). The official said that Shanghai authorities were very concerned about the viability of AIG China's operations. They were particularly pointed in their questioning of AIG's coinsurance agreements and any guarantees of support made between AIG China and other AIG affiliates or subsidiaries outside China. Shanghai officials initially demanded an immediate cessation of any such cross-border arrangements and threatened to stop their operations in Shanghai if they felt there was not enough insulation between AIG China and AIG entities outside China. According to the AIG official, Shanghai authorities in the end were sufficiently satisfied with AIG China's September 18 explanation of the company's current operations and arrangements in China. CAMP