As attention from Wall Street's financial firefight turned to the federal bailout of American International Group Wednesday, Washington insurance commissioner Mike Kreidler said the companies insurance clients shouldn't be sweating things.

"Many policyholders have expressed concerns in light of the recent news surrounding AIG," Kreidler said in a press release. "This is a fluid situation, but I can assure you that the insurance companies owned by AIG are in good financial shape and capable of paying claims."

The multibillion-dollar bailout is likely to stabilize the company, he said.

"But regardless of what happens to the parent company, AIG, there is a firewall in place that guards the assets of the insurance companies and protects policyholders," he said. "The parent company cannot move assets upstream without the approval of state insurance regulators."

Kreidler said he and the other regulators can prevent AIG from "raiding" its insurance companies. Here's the critical part:

"If you have a policy through an AIG insurance company, whether it's an auto policy, homeowner policy or even an annuity, your coverage is safe," Kreidler said. "Do not cancel your policy or cash in your annuity...Even under the worst case scenario, policyholders' claims will be paid."

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