Hate to be the bearer of bad news, but the “parent” just got permissions by the New York Director of Insurance (as well as the Governor) to raid the cookie jar – $20 billion worth.
I couldn’t agree with you more. Mr. Greenberg also believed that deals didn’t have to be complicated to work – and if the deal was too complicated to understand, you had no business doing the business to begin with.
I don’t believe AIG would have ever been in the CDS business as aggressively as they are now under Greenberg’s iron hand. He would have put an end to the derivatives unit the minute they started getting into deals he personally didn’t understand. Unfortunately for us, he left in 2005.
I think it will be a shame if the Feds step in and rescue AIG. I am an insurance executive and have first hand looks at how AIG Insurance Subsidiaries operate. Recently, they have been buying property and casualty business by lowering their prices far below what their competitors are able to match. It is absolutely insane some of the low premiums I see on their products. I highly doubt that if they had a strong run of claims, that they would be able to pay them all. It is the old ponsi scheme in action.
Another thing that has run it into the ground are the fat cat executives in the company. Don’t tell me that Hank Greenberg is worth billions of dollars. He got away with flat robbery of the company. If I were a share holder, I would certainly be holding him accountable for some of their losses. If the Feds bail them out, they are setting themselves up to have to bail more out in the future. They will setting a precedent.Basically, they are saying be as unscrupulous as you please and the government will take care of you. I’m sorry, but I am flat angry about this one.
Basically, they are saying be as unscrupulous as you please and the government will take care of you. …. and
isn’t this what americans will expect with universal health care? pay out, pay out, pay out.
Greenberg would never have LET the investments SIT in that garbage. No job and a big loan. Typical liberal ideas that cost all taxpayers money. Greenberg is thrown out by Hooker-Boy and see where he is now?
The gov’t should MANDATE that Hank gets back into AIG if/when they extend the cash. No one – repeat, NO ONE – could run that company like he did. Frankly a little megalomania is a good thing in a culture where “A Prime” persoanlities are thought of as gods.
Hank’s motto was that if an opportunity fit his three criterias he would do it: 1) is it profitable 2) is it legitimate and 3) why isn’t anyone else doing it?
Knock them all you want but AIG is a key part of our market. Maybe underselling the competition isn’t the best way to keep market share (we’ve always tempered their pricing with the adage that they don’t pay claims or service their book) but they provide vital capacity and are willing to think outside the box. That can be value-added.
I had a number of lunches “upstairs” at AIG and have had family members in the business work much closer with execs there and the one word ALWAYS used about Hank and his team was DYNAMIC.
I can only hope that the bailout isn’t like what the feds did for Chrysler back in the 80’s – unless they have a Lee Iacocca for ever. Hank IS that Lee – but without continuity planning the end result can only be selloffs to foreign parents, and ultimately to venture cap markets.
Best of luck to ALL our friends at AIG/Lex/NU etc.
This is an extract of a communication from AIG. I don’t work for them and I don’t vouch for its accuracy or its statements, but you asked:
AIG’s challenges do not impact AIG Commercial Insurance’s capital position.
Here are a few more facts we think are important for you to know…
The liquidity of AIG Commercial Insurance remains very strong.
AIG Commercial Insurance’s substantial capital position is independent of its parent, and cannot be used by the parent to satisfy its liquidity needs.
Since 2005, AIG Commercial Insurance’s statutory surplus has increased by over 50% to $26.7 billion.
AIG Commercial Insurance’s ability to pay claims and its commitment to writing challenging risks is undiminished.
AIG Commercial Insurance continues to exhibit strong financial performance with 2008 second quarter operating income of nearly $1 billion, net written premiums of $5.99 billion and a profitable combined ratio of 93.7%.
The articles mentions ‘AIG Commercial Insurance’. What exactly does this mean relative to the personal home, auto, excess, boat, etc., policies individuals have placed with AIG?
This is where the concern is. People are panicked.
Let’s get one thing straight. The Fed is not the government. It is not a federal instituition any more than Federal Express. It is a privately held institution that is not controlled by the Government. They controll our money supply but we do not control them. So the credit extended to AIG would not be from the government.
Agree they are a vital part of the market… but something else would fill their void.
When there are no suitors, no other capital, they ask the fed for not 40 million, but 40 Billion dollars?
I think the Fed needs to make the right call and tell AIG that the B in their $40B request should stand for their new S&P rating and not a bridge loan offer.
I checked the stock price this morning. It was trading at $7.04. Didn’t AIG trade for > $70 in the last year? Wow.
All of the “accounting gimick” chickens seem to be coming home to roost at the same time. We all know AIG was no stranger to accounting schenanigans. Their chickens are roosting, and why should the FED bail them out? They shouldn’t.
Danny, you are partly correct in your description of the Fed.
Let’s go the extreme interpretation and say the Fed is a 100% private entity. If that’s the case wouldn’t they have to be “bat-youknowwhat crazy” to lend AIG $40,000,000,000.00?
SO……LET ME GET THIS RIGHT……IF I’M THE CEO OF A VERY BIG COMPANY, I CAN OPERATE AS GOOFY AS I WANT AS LONG AS I HAVE A GOLDEN PARACHUTE CUZ THE GUYS LEFT HOLDING THE BAG CAN JUST REFILL IT WITH TAXPAYER MONEY????
Don’t give up on AIG. Talk to the Chin, they have over 1.3 trillion. US80 billion is nothing to them! AIG is a strong brand and have a sound history of helping retirees with annuity plans.
The crisis will end soon, don’t give up think of the people and their retirement funds. Please, thanks don’t give up an international icon. SOS.
Cincinnati said it had sold most of the $24 million of Lehman preferred stock and debt securities held at June 30, and expects to take a related charge of $9 million in third quarter.
Lehman Brothers, once an investment banking giant, filed for bankruptcy protection on Monday after trying to finance too many risky assets with too little capital.
Cincinnati, which still holds securities of American International Group Inc worth about $81 million as of September 15, sees an impairment charge of about $50 million from securities related to the mortgage giants Fannie Mae and Freddie Mac.
Isn’t this a nice portfolio ?? And it doesn’t even mention Fifth Third Bank !
Hate to be the bearer of bad news, but the “parent” just got permissions by the New York Director of Insurance (as well as the Governor) to raid the cookie jar – $20 billion worth.
I also want a loan for $40B. They can have my most valuable asset in exhcnage.
I couldn’t agree with you more. Mr. Greenberg also believed that deals didn’t have to be complicated to work – and if the deal was too complicated to understand, you had no business doing the business to begin with.
I don’t believe AIG would have ever been in the CDS business as aggressively as they are now under Greenberg’s iron hand. He would have put an end to the derivatives unit the minute they started getting into deals he personally didn’t understand. Unfortunately for us, he left in 2005.
$hit!
Ha ha.. yep that is about right!
GOD I HOPE SO. TOO MANY VACANT HOMES, TOO MANY SAD PHONE CALLS FROM CLIENTS LOSING THEIR HOMES.
I think it will be a shame if the Feds step in and rescue AIG. I am an insurance executive and have first hand looks at how AIG Insurance Subsidiaries operate. Recently, they have been buying property and casualty business by lowering their prices far below what their competitors are able to match. It is absolutely insane some of the low premiums I see on their products. I highly doubt that if they had a strong run of claims, that they would be able to pay them all. It is the old ponsi scheme in action.
Another thing that has run it into the ground are the fat cat executives in the company. Don’t tell me that Hank Greenberg is worth billions of dollars. He got away with flat robbery of the company. If I were a share holder, I would certainly be holding him accountable for some of their losses. If the Feds bail them out, they are setting themselves up to have to bail more out in the future. They will setting a precedent.Basically, they are saying be as unscrupulous as you please and the government will take care of you. I’m sorry, but I am flat angry about this one.
Basically, they are saying be as unscrupulous as you please and the government will take care of you. …. and
isn’t this what americans will expect with universal health care? pay out, pay out, pay out.
c’mon, Gary…if the government bails them out, it’ll fix everything! Look how it helped the airline industry! oh, wait…
Greenberg would never have LET the investments SIT in that garbage. No job and a big loan. Typical liberal ideas that cost all taxpayers money. Greenberg is thrown out by Hooker-Boy and see where he is now?
How the mighty have fallen.
The gov’t should MANDATE that Hank gets back into AIG if/when they extend the cash. No one – repeat, NO ONE – could run that company like he did. Frankly a little megalomania is a good thing in a culture where “A Prime” persoanlities are thought of as gods.
Hank’s motto was that if an opportunity fit his three criterias he would do it: 1) is it profitable 2) is it legitimate and 3) why isn’t anyone else doing it?
Knock them all you want but AIG is a key part of our market. Maybe underselling the competition isn’t the best way to keep market share (we’ve always tempered their pricing with the adage that they don’t pay claims or service their book) but they provide vital capacity and are willing to think outside the box. That can be value-added.
I had a number of lunches “upstairs” at AIG and have had family members in the business work much closer with execs there and the one word ALWAYS used about Hank and his team was DYNAMIC.
I can only hope that the bailout isn’t like what the feds did for Chrysler back in the 80’s – unless they have a Lee Iacocca for ever. Hank IS that Lee – but without continuity planning the end result can only be selloffs to foreign parents, and ultimately to venture cap markets.
Best of luck to ALL our friends at AIG/Lex/NU etc.
What do we tell the flood of clients who are calling questioning whether AIG is the company they should be insuring their assets with?
This is an extract of a communication from AIG. I don’t work for them and I don’t vouch for its accuracy or its statements, but you asked:
AIG’s challenges do not impact AIG Commercial Insurance’s capital position.
Here are a few more facts we think are important for you to know…
The liquidity of AIG Commercial Insurance remains very strong.
AIG Commercial Insurance’s substantial capital position is independent of its parent, and cannot be used by the parent to satisfy its liquidity needs.
Since 2005, AIG Commercial Insurance’s statutory surplus has increased by over 50% to $26.7 billion.
AIG Commercial Insurance’s ability to pay claims and its commitment to writing challenging risks is undiminished.
AIG Commercial Insurance continues to exhibit strong financial performance with 2008 second quarter operating income of nearly $1 billion, net written premiums of $5.99 billion and a profitable combined ratio of 93.7%.
Stick around. Try telling them that.
The articles mentions ‘AIG Commercial Insurance’. What exactly does this mean relative to the personal home, auto, excess, boat, etc., policies individuals have placed with AIG?
This is where the concern is. People are panicked.
Did you see IJ interview series with Greenberg? Not exactly the topic of this story, but still very interesting, watch here.
http://www.insurancejournal.tv/?s=greenberg
I wonder if IJ could get Greenberg comments on this news?
I don’t handle those lines and wouldn’t care to comment on things I know even less about than that which I already am short on.
Since Warren has not returned their calls, the Execs at AIG have a call in to Jimmy Buffett. They’ll take the money from anyone at this point.
Let’s get one thing straight. The Fed is not the government. It is not a federal instituition any more than Federal Express. It is a privately held institution that is not controlled by the Government. They controll our money supply but we do not control them. So the credit extended to AIG would not be from the government.
Danny, who bailed out Bear Stearns?
Agree they are a vital part of the market… but something else would fill their void.
When there are no suitors, no other capital, they ask the fed for not 40 million, but 40 Billion dollars?
I think the Fed needs to make the right call and tell AIG that the B in their $40B request should stand for their new S&P rating and not a bridge loan offer.
I checked the stock price this morning. It was trading at $7.04. Didn’t AIG trade for > $70 in the last year? Wow.
All of the “accounting gimick” chickens seem to be coming home to roost at the same time. We all know AIG was no stranger to accounting schenanigans. Their chickens are roosting, and why should the FED bail them out? They shouldn’t.
Danny, you are partly correct in your description of the Fed.
Let’s go the extreme interpretation and say the Fed is a 100% private entity. If that’s the case wouldn’t they have to be “bat-youknowwhat crazy” to lend AIG $40,000,000,000.00?
Matt, what if they ended up with most of the profitable assets as payback?
JP Morgan Chase bought them at $2.00 per share.
Follow this link for more info on the Fed.
http://land.netonecom.net/tlp/ref/federal_reserve.shtml
I want a govt loan too
too bad aint gonna happen
SO……LET ME GET THIS RIGHT……IF I’M THE CEO OF A VERY BIG COMPANY, I CAN OPERATE AS GOOFY AS I WANT AS LONG AS I HAVE A GOLDEN PARACHUTE CUZ THE GUYS LEFT HOLDING THE BAG CAN JUST REFILL IT WITH TAXPAYER MONEY????
Don’t give up on AIG. Talk to the Chin, they have over 1.3 trillion. US80 billion is nothing to them! AIG is a strong brand and have a sound history of helping retirees with annuity plans.
The crisis will end soon, don’t give up think of the people and their retirement funds. Please, thanks don’t give up an international icon. SOS.
Cincinnati said it had sold most of the $24 million of Lehman preferred stock and debt securities held at June 30, and expects to take a related charge of $9 million in third quarter.
Lehman Brothers, once an investment banking giant, filed for bankruptcy protection on Monday after trying to finance too many risky assets with too little capital.
Cincinnati, which still holds securities of American International Group Inc worth about $81 million as of September 15, sees an impairment charge of about $50 million from securities related to the mortgage giants Fannie Mae and Freddie Mac.
Isn’t this a nice portfolio ?? And it doesn’t even mention Fifth Third Bank !
AIG!!! fail