Singapore - Anxious Singaporeans queued up in the wake of the near-collapse of US insurance giant American International Group (AIG) for a second day Wednesday to surrender policies issued by its local subsidiary.

American International Assurance (AIA) policyholders lined up despite news the US Federal Reserve Bank moved to bail out parent firm AIG with an 85-billion-dollar bridge loan.

A bankruptcy filing by AIG, a huge world player in insuring risk for institutions, would have had an even greater impact on the US and global finance system than Monday's 
600-billion-dollar bankruptcy by Lehman Brothers Holdings Inc, industry experts warned.

By midday, nearly 100 customers were in line to surrender life policies, unfazed by the Fed's plans.

"There is a lot of uncertainty in the US market," said a 45-year-old woman requesting anonymity. "I'm not taking any chances."

AIA and Singapore's central bank both urged customers against giving up policies after nearly 1,000 people descended on the AIA Customer Service Centre on Tuesday, with the central bank warning such action might mean financial losses for customers and the loss of potentially essential protection.

The subsidiary of AIG sought to ease concerns by assuring policyholders that it has more than sufficient capital and reserves to meet its obligations.

The funds maintained in the city-state "are segregated from AIG and are held specifically for the purpose of meeting our obligations," an AIA statement said.

Economists noted the effects of the turmoil on Wall Street is not as severe as during the Asian financial crisis of the late 1990s.

"Asia is not at the epicentre of this crisis," said Citigroup's Kit Wei Zheng. He noted the region has restructured and is more resilient.

With 4,000 agents and more than 2 million policies in force, AIA is one of the largest insurers operating in Singapore. (dpa)