AIG Posts Q4 Profit; Commercial Combined Ratio at 107.7

February 14, 2014

  • February 14, 2014 at 11:31 am
    Insurance 102 says:
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    A combined ratio of 107.7, and this shows improvement? For commercial customers of AIG, this means to expect further rate increases even if you are an excellent account. With alternative capital, look for these accounts to move to other carriers.

    AIG’s stock is a little over $48 a share this morning. Figuring the reverse stock swap, the company has gone from $1 a share to $2.50 in six years. This is not a great return for shareholders.

    With profitable business units sold off for garage sale prices and the loss of key talent to competing carriers, AIG no longer resembles the unique financial services firm that it once was. It looks like any Main Street insurance carrier.

    The future is not bright for AIG.

    The future looks gloomy for this company.

    • February 14, 2014 at 1:42 pm
      Phoenix says:
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      Yep. Gloom and doom since Spitzer was NYAG. Yet here we are. “The future is not bright for AIG”, in spite of the fact that all indications are the exact opposite.

      Benmosche is tackling the “too many chiefs and not enough indians” problem in the ranks. Watch the stock react.

      • February 14, 2014 at 1:49 pm
        insurance102 says:
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        The stock market is not always right. Look at the tech bubble of 2001-2003. It boosted stocks with little or no cash flow to extraordinary valuations. When the earnings did not materialize, the companies crashed.

        The company has lost a great deal of its underwriting talent and sold off its most desired units for extremely low prices.

        The company resembles more of a typical insurance carrier versus the financial services firm that it once was.

        The move to watch headcount and move to less expensive cities are moves taken by other main street carriers a long time ago.

        • February 14, 2014 at 2:22 pm
          Libby says:
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          The insurance side of AIG is the side that has steadily and historically been successful. I think they’re going back to what they do well. Resembling a typical insurance carrier versus a financial services firm is not a bad thing.

          • February 14, 2014 at 2:23 pm
            Insurance102 says:
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            Agreed. It is an expensive mistake for investors and the Amerian taxpayer.

      • February 14, 2014 at 2:21 pm
        txmouthbreatherboogereatertx says:
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        Spitzer paid the price when he was ratted out with his hooker by AIG brass. They were all clients of the same pin cushion.

  • February 14, 2014 at 1:28 pm
    Libby says:
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    The future for AIG is all sunshine and roses, as long as you’re not an employee. The increased their dividend 25% and made $2B in profit. A combined ratio of 107.7 does not mean they’re not making money.

    • February 14, 2014 at 2:22 pm
      Insurance102 says:
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      oops. should be reverse stock split versus swap. That is what happen when I type too quickly!

      • February 14, 2014 at 2:25 pm
        Libby says:
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        We knew what you meant.

  • February 14, 2014 at 1:44 pm
    insurance102 says:
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    Not really Libby. Have you checked the beta of the stock? The beta of the stock measures its risk versus the risk of similar assets.
    A normal beta is 1, and a higher beta means that is has higher risk related to similar assets. What is the beta on AIG? 3.38.
    It is a pretty lousy return for a stock that is much more risky than its peers to only move from $1 to $2.50.
    Just my two cents Libby.

    • February 14, 2014 at 2:23 pm
      Libby says:
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      No, I’m not familiar with stock betas. But perhaps AIG’s beta is so high because of the risky business they engaged in that about near ruined them. They should stick to underwriting, price gouging, and claim denials. That’s what they do best.

      • February 14, 2014 at 2:55 pm
        Agent says:
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        More unemployment for NY? I am not sure paying a dividend to shareholders with a 1.07 Combined on Commercial is a smart thing to do, but after all, it is AIG and they are arrogant enough to do almost anything from bid rigging to playing with sub prime notes that cost the taxpayers $182 Billion and change. I am not convinced they paid all of it back either.

        • February 14, 2014 at 3:13 pm
          Libby says:
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          Looks like they’ll be coming your way to Texas, Agent! I wouldn’t want them in my backyard. NIMN!!

      • February 14, 2014 at 3:57 pm
        insurance102 says:
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        Libby,
        Actually, AIG’s has sold off a lot of its unrelated P&C insurance businesses such as its aircraft leasing unit, Sun America, etc. Moreover, they have wound down the credit swap and financial services business that nearly sent the USA into another Great Depression.
        The stock market is looking at its current operations which resembles a main street insurance carrier, and it is viewed as being much more risky when compared to other carriers. Hence, you still see a high beta. If you look at competing carriers like Traveler’s their betas are much less risky and probably better stocks to hold over the long term. Traveler’s beta is .79.
        As I have mentioned before, I do not know how the company’s strategic vision when it has lost some of its best employees to competing carriers (Ironshore, Berkshire, etc). In addition, it has sold off some of its most valuable operations like Hartford Steam Boiler and a large share of its East Asian insurance operations at garage sale prices.

        Over time, we will see if this is a good deal for stockholders. But AIG employees got the short end of this deal.

        • February 14, 2014 at 4:56 pm
          Libby says:
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          Well, that makes sense, 102. AIG is known for writing risky business. That’s what has made them what they are. It was only a month after 9/11 and they had a product out for terrorism coverage. They’re the first to come out with all the leading edge products (side C D&O, cyber liability, workplace violence coverage, etc.)



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