Annuities with a Failing Company (ex. AIG)

Francisco,
Generally speaking, a fixed annuity is part of the general account of the insurance company and may potentially be at risk in the event that the company fails.

However, the bailout of AIG should help to preserve the assets of those with insurance and annuity contracts with the company. Furthermore, nearly all states provide a state guaranty fund that will insure at least $100,000 of annuity cash value (more in some states). You can check into your state's laws for more information on this.

If your annuity is significantly higher than $100,000, the excess can be at risk if the company truly does fail though. However, with the recent government intervention to preserve AIG, and the fact that some parts of the company appear to be at least partially insulated from the failure of other parts of the company, I would try to gather more information from AIG itself before moving the funds too hastily. Especially if you have surrender charges on the annuity. If the company really does fail, you may still recover some or all of your annuity, but it will depend on how the company's assets are divided and whether or how much in debt the company really is.

On the other hand, if having the funds at risk in any way isn't tolerable for you and it will help you sleep at night, move the money if that's what's necessary. Just be cautious about exit charges, and if possible you might explore utilizing a 1035 exchange to move the annuity to another annuity on a tax-free basis.

I hope that helps a little!