The $85 billion rescue of American International Group Inc. caused a sigh of relief at its Hawai'i subsidiaries yesterday, though some uncertainty is expected to continue here as AIG chooses which units to sell off to repay a Federal Reserve loan.

The world's largest insurer's operations here include AIG Hawaii Insurance Co., as well as Hawaii Insurance Consultants, American Pacific Insurance Co. and other firms. It is the third-largest auto insurer here and employs more than 300 workers statewide.

State Insurance Division figures show AIG Hawaii has $131 million in direct written premiums in life insurance products, $90 million in private passenger auto insurance, $29 million in homeowners policies and $11.5 million in commercial auto.

Under the deal announced late yesterday, the Federal Reserve lent the money with the understanding that it is to be repaid through the sale of the company's assets. There was no immediate word on what AIG, the largest U.S. insurer, would place on the market. The company has dozens of subsidiaries flung across 130 countries.

Little was known locally yesterday afternoon as news dribbled out about the Fed's rescue.

Robin Campaniano, AIG Hawaii president and chief executive officer, said the company was fielding calls from anxious policyholders wanting to know about the local operation's stability.

"We've gotten some calls this morning from people worried about their policies," said Campaniano, who once served as Hawai'i insurance commissioner.

He said some people asked whether the company was going to be around to honor claims.

"The answer is, absolutely," he said.

There also were calls to another AIG office here by people holding annuities, a financial instrument typically held by retirees to help fund their retirement. While there may have been some people taking the expensive step of canceling the annuities, others were satisfied that AIG's problems didn't mean there were problems with the annuities, Campaniano said.

DETAILS REQUESTED

The state is continuing to monitor the situation with AIG Hawaii and has requested information on its solvency and ability to pay claims. The state Insurance Division also reported calls from people inquiring about the company's financial status and how it may impact policy holders, said J.P. Schmidt, state insurance commissioner.

"I am watching the events very closely and requesting more information from AIG Hawaii," Schmidt said.

He said the state currently considers the local unit to be in solid financial condition, though noted AIG Hawaii was affected by a ratings agency downgrade yesterday. Based on the parent company's situation, Standard & Poor's Ratings downgraded AIG Hawaii to "A+" from "AA-."

"The fact that it's still an A-rated company means that it is still a very strong company," Schmidt said.

"It's when you get down to the lower Bs that you start to get concerned, and if it's rated C, it's not accepted by banks for home loans and other things of that nature."

Campaniano said AIG Hawaii has $65 million in policy holder surplus, or what it can pay out for claims. It also has $125 million in assets. He said problems with the parent company developed in its financial services business.

"The thing is, on the insurance side all the insurance entities are doing quite well," Campaniano said.

"What's surprising is how fast this has happened and how volatile financial markets are."