In third world countries like Zimbabwe where AIG disinvested some three years ago,their underwriting philosophy was a model of financial prudence and aversion to exotic risk. It is all the more surprising that AIG’s US portfolio was exposed to traditionally very risky subprime mortgage based derivative instruments. When the sophistication of these derivatives is stripped off, one is left with unsound underwriting fundamentals.
The insurance industry worlwide is in deep shock because an industry icon has bitten the dust.
In third world countries like Zimbabwe where AIG disinvested some three years ago,their underwriting philosophy was a model of financial prudence and aversion to exotic risk. It is all the more surprising that AIG’s US portfolio was exposed to traditionally very risky subprime mortgage based derivative instruments. When the sophistication of these derivatives is stripped off, one is left with unsound underwriting fundamentals.
The insurance industry worlwide is in deep shock because an industry icon has bitten the dust.