The American International Group executives are assuring investors that Sandy-related losses won’t have any significant impact on the company’s financial strength.
Also, AIG announced in its Sunday, Nov. 4, bulletin to employees that most of its offices in the New York metro area will reopen on Monday, Nov. 5. However, several New York locations, including the headquarters building at 180 Maiden Lane in lower Manhattan which suffered heavy flooding, will still be inaccessible for the week of Nov. 5. Employees whose offices remain inaccessible will either continue to work remotely or report to a designated AIG facility.
During the company’s earnings conference call last Friday, Nov. 2., AIG’s CEO Robert Benmosche said Sandy-related losses won’t be a “huge issue for us financially.”
“We are going through this on a claim-by-claim basis. We are working with clients right now and it is hard to give a scope of it, because of some of the flooding and water damages that were done — especially in the New York area and Manhattan,” said CEO Benmosche. “But I can say we don’t see this as being any kind of huge issue for us financially other than just dealing with issues at hand.”
Peter Hancock, head of AIG’s property/casualty operations, also said during the earnings call that it’s too early to give any specific estimate. “Usually we get about 80 percent of our claim notices within about 90 days. So we are obviously at the very beginning of that whole process,” said Hancock.
Hancock said the property damage comes in quicker than the business interruption and that the company is looking at a broad range of commercial properties across sectors in affected areas. “It’s a big broad area and we are getting new information every day. It’s way too early to comment intelligently about it.”
He added that over the last three years, the company made changes on the retention policies and more generally its approach to deductibles and flood supplements. Hancock said these changes helped AIG with Irene and will also help this time relative to the exposures the company previously had. The company also made major changes in its global reinsurance strategy in terms of risk appetite internationally, which should be helpful, said Hancock.
AIG’s CEO Robert Benmosche also said during a television interview last week that Sandy won’t have a significant impact on the strength of company.
“We’re the largest commercial insurer in the country, so you would expect us to have significant losses with our customers. We’re busy with loss engineers out there. Our priority is to get them up and running and get them back to business,” Benmosche said during an interview with CNBC last Thursday.
“We haven’t added it up, but I can assure you we have significant amounts of cash on hand. We have plenty of liquidity. I don’t think this will be a significant financial impact in terms of the strength of the company. We will see as the quarter unfolds,” said Benmosche during the CNBC interview.