Posted On: October 7, 2008, 10:07 am CDT

Posted By: Stat Guy

I am not sure why one would post a diatibe against the AIG insurance ops, when they are well capitalized because they are required by law. Yes, AIG got into some trouble about swaps with Star to bulk up the reserves and inflate the financial results but that is completely different from insurance ops and the mess the holding company now finds itself. Basically, the holding company underwrote swaps without capitalization; now that the underlying business went sour, they have nothing to pay off with, OTHER than their insurance assets, which are well-capitalized; this is the collateral that underwrites the $85B loan. It may be that these assets will be sold off, or spun off but I don't know that insurance execs are at fault, but more the investment, side-car, derivative sector which drove the holding company's growth and ultimate failure....if anyone knows more or better, please speak up but I'm not one to bash AIG completely, anymore than I would Berkshire.