Divorce AIG Style

By | March 15, 2009

  • March 19, 2009 at 12:31 pm
    Brad R. says:
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    Great article, thanks. If only the major TV networks would report this information. That would really help calm the public and help alleviate their concerns about the Insurance Subsidies of AIG.
    My guess is that this would not be a sensational enough story for the networks to give them the ratings they so desperately seek.

  • March 19, 2009 at 12:43 pm
    n/a says:
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    Corky- Loved you in Life Goes On.

  • March 19, 2009 at 12:51 pm
    Dazed and Confused says:
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    Since I don’t get responses when I email IJ’s authors directly, I’ll try posing my questions here: if AIG’s premium retention is down only 5% but their new business premium is down 37%, what does that say about their renewal pricing (and retention)? Andrew G. Simpson, are these numbers what were actually reported by AIG? Given this market, they don’t seem possible.

  • March 19, 2009 at 12:52 pm
    Texas says:
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    AIG is big, and it fell into the trap of CDS business because it was profitable. The people in Washington that made the stupid rules are now screaming for AIG heads and ducking their own culpability. One of my lady friends told me that she did charity work for a guy whose name sounded like yours, but she said his name should have been “Shorty”.

  • March 19, 2009 at 12:56 pm
    Bob says:
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    Corky,
    I certainly value your opinion.

  • March 19, 2009 at 1:02 am
    j says:
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    Great article. This will NEVER make it to the mainstream news, not exciting enough. Plus, no one is “angry.”

  • March 19, 2009 at 1:25 am
    B says:
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    Speaking of a poorly written rant…

  • March 19, 2009 at 1:40 am
    ROFL says:
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    LOL @ corky

  • March 19, 2009 at 1:40 am
    Offended says:
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    You are very inappropriate. You should not be allowed to post on this website again

  • March 19, 2009 at 1:46 am
    caffiend says:
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    The insurance companies under the AIG umbrella have always been financially stable. Otherwise the insurance commissioners in each of the 50 states would have shut them down long ago.

    And on an ethical note… As insurance professionals you really should be careful about badmouthing the competition like that. Generally falls under the “defamation” definition under Unfair Trade Practices. Look it up sometime.

    And no, I don’t work for AIG.

  • March 19, 2009 at 1:59 am
    barb wired says:
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    AIG has a culture of fabricating any story they want, as long as it generates revenue, starting with dear old hank. so nothing i see amazes me about this company. and about this “too big to fail” lie about AIG everyone keeps chanting in between sips of the kool aide – didn’t this country at one time anti-monopoly laws in place just so consumers not face this sort of problem?

  • March 19, 2009 at 2:04 am
    caffiend says:
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    do your research

    monopoly [muh-nop-uh-lee]
    -noun, plural -lies.
    1. exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.

    In no way did AIGFP have a monopoly on credit default swaps or other financial deals.

    On the insurance side, there’s quite a bit of competition there as well.

  • March 19, 2009 at 2:50 am
    GL GURU says:
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    So if they shed AIG P&C, do the taxpayers get money for that?

  • March 19, 2009 at 3:00 am
    SBH says:
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    Seems we (Taxpayers) should have an 80% stake in that one also.

  • March 19, 2009 at 3:09 am
    caffiend says:
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    read Edward Liddy’s testimony. Link below

    http://www.house.gov/apps/list/hearing/financialsvcs_dem/fsc_testimony_of_mr_edward_liddy.pdf

    You’ll find the answer you seek there, on about pg 6-7. However I’ll quote it here for you.

    From Edward Liddy’s testimony
    “We are also moving urgently on a business plan designed to maximize the value of our core buisnesses, so that in turn we can maximize the amount that we repay to american taxpayers. On March 2nd, we announced robust new arrangments with the Federal Reserve and the US Treasury that give us added flexiblility to execute that business plan. With these changes, we will take two of AIG’s insurance companies – AIA and ALICO – and place them in a trust for the benefit of the Federal Reserve. When we do that, we will substantially reduce the $40 billion in AIG’s outstanding debt on the $60 billion Federal Reserve Credit Facility.”

    And to SBH, pay attention man, third paragraph in “AIG’s P/C executives have been victims of the other AIG operators
    who have tarnished the family name. Their insurance operations
    have remained profitable and their policyholders have remained protected. Their insurance monies are completely walled off so that they can’t be raided. They have not needed or received any of the billions of dollars doled out by the government to AIG.”

    The insurance divisions did not get a dime from the US government.

  • March 19, 2009 at 3:52 am
    Peter Polstein says:
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    This convenient divorce presupposes that it is a relatively simple separation of 12 insurance company’s from an existing Group that is already publicly traded. But aside from that, in attempting to question Doyle relative to his 13 power point exhibit of 3/9/09, I frankly got little in the way of response.

    First of all, there is the question of his $60 billion in assets, and the veracity of the physical value. During the review of the 725 page 10K it was noted, that AIG’s basis of evaluating costs had ” reinvented the definition of costs” to the degree of being “opaque” On the assumption that the valuation of these assets may have been of like quality, and as the majority of them (74%) were muni’s gave rise to the veracity of the presentation.

    Next was the question as to whether ASLIv was actually a participant in the so called pool of companies. In his presentation exhibit # 12 a clear definition of the Commercial Insurance Group was delineated as 9 insurers in the admitted pool and 3 in the surplus lines pool. ASLIC was a notation in the non pooled group as having an 80% quota share position with National Union and the backing of the “Group”. It was an unnecessary comment given the projection on the exhibit.

    While in a telephonic interview he said
    “all company’s in the commercial group would be in AIU Holdings, there still is the question of ASLIC.

    He and they, paint a picture of substantial solvency, with experienced staff, which is frankly a push, given the significant number of senior employees who have left.

    With the advent of continued losses in the Group, and the failure to sell assets for a number of legitimate reasons, the Government at some point will be looking to recoup, one hell of a lot more than the current amount, assuming they continue to play counterparties.

    All of this will be interesting to watch as AIU Holdings unfolds.

    Be well all

  • March 20, 2009 at 8:18 am
    David says:
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    Not only did AIG Insurance Divisions not get government money but, they made an emergency loan of $20 mill to the holding company in the early days of the crisis.

  • March 20, 2009 at 9:45 am
    matt says:
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    i found my self complaining about Lex/Nat Union bailout. just take their profitable business-it feels a lot better than posting a message on a website.$120k in my hands is better than theirs. get off the message boards and work against them…

  • March 20, 2009 at 12:46 pm
    Corketh T. Nimmick, Esq says:
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    Thanks readers for the comments. I’m glad I’ve upset and offended and entertained many of my fellow insurance peers here on Insurance Journal- the pinnacle of insurance excellence.

    Caffiend- Thanks for your legal advice. Last I checked, you were allowed to have an opinion on a company. I’ll take my risks “badmouthing.” Just go back to selling non-standard auto, or what ever you do in your bucket shop insurance operation.

    Yes, I understand AIG is one of the only insurers with the capacity to insure very complex risks such as offshore oil rigs, etc. and losing AIG would effect many insurers as they probably reinsure many insurers. However, I applaud the critism. The company acted very greedy and made bad bets. I’m please their name is tarnished. F*ck em.

  • March 20, 2009 at 2:14 am
    Joe Mama says:
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    For the record, Corky, I’m more offended that your original comment was pulled before I could read it.

  • March 20, 2009 at 3:28 am
    The Underwriter says:
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    If and when AIU Holdings is spun off, it will be initially 100% owned by AIG, which means 80% owned by the taxpayers. 20% could be sold for cash, which AIG can use it to repay the Fed. Value of AIU Holdings would be 3 to 4 times surplus or 75 to 100 billion. This value is higher in an orderly transition. The parent/taxpayers would have as an asset stock in a publically traded company which would multiply the current book value.

  • March 23, 2009 at 10:46 am
    Paul C says:
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    I’ve forwarding this info to Fox Business News, Fox and Friends, Greta and the Phoenix CBS Station to ask them to be balanced and truthful in their reporting. If more of us would speak maybe we can have some change in the reporting.

  • March 23, 2009 at 2:52 am
    Alphonse Denayer says:
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    This is apparently much needed clarification to offset damage done by the professional morons on CNN and other cable news commentators.

    AIG had done some good press work along these lines when the first bailout was announced but not much thereafter. Spinning off the commercial insurance entities should have been done long ago, placing the Financial Products division management company into receivership. This would have saved the U.S. government $180 billion, spent largely because we have no congressional reps with the gravitas or discipline to understand the issue and arrive at an intelligent solution. This is apparent when we consider their latest solution for the crisis they have created is for the government to load money to itself. Bubble maker aficionados on Wall Street have jumped on the opportunity to rally over this specious spectacle.

    Our most productive approach now, may be to initiate class action suits against Fannie and Freddie, holding them liable for the financial crisis we are now in, by forcing U.S. banks to make predictably insolvent loans Freddie (acting at the direction of HUD at the President Clinton and the U.S. congress). Such a step would be enormously productive insofar as it would systemically revert the liability for this crisis on the original perpetrators – the U.S. Government.

  • March 23, 2009 at 6:45 am
    Mike F says:
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    I totally agree with you, this should have happened months ago, but I am also not naive to say that Paulson did not know about this, don’t forget Goldman got 12 billion from the bailout to AIG. I have been an advocate to say break the to big to fail companies into smaller portions, which also includes banks such as Citi, Jp Morgan, etc. By putting small regional banks into receivership and then turning them over to the larger banks is only creating another AIG.

  • March 24, 2009 at 7:17 am
    Texas says:
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    Be sure to copy all of the other networks as many are singing the class warfare siren song. Forget balance, get truth. Don’t forget that the government (Barney, Dodd, & company) started all of this and AIG (and many others) simply made money off what was a legal and government desired business proposition. Notice that the new solution is to use “private sector” money when they socialize a business. I tend to agree with breaking up “too big to fail”, but they would not have failed except for the government regulations that they complied with. This was yet another use of “private sector” money to accomplish a government goal. It failed, as do many social experiments. Also, remember the AT&T breakup and what a great deal that was. At least someone got Dodd to admit that he knew about the bonuses after he denied (lied)doing it. What we are dealing with in all cases is the law of unintended consequences.



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