a) Income was due to a large profit in AIA. In order to pay back the US government, AIG will have to sell profitable units like AIA. How will the company be of value when its most important parts are sold?
b) The drop in revenue makes sense. With the current soft market, the company probably has an unprofitable book of business in many of its property and casualty division(s). The company is faced with walking away from unprofitable business or dramatically raising rates. With the abundant amount of capital, the market will continue to remain soft for the long term. This will force the company to continue losing renewal business and being uncompetitive on new business. The drop in US revenue will continue from property/casualty operations will continue….
c) The 2nd quarter combined ratio is 104. As the tornado/hurricane season continues, this amount might increase. With a combined ratio of 104 (or higher), the company will not be underwriting business for long……
With a closer analysis, one reads:
a) Income was due to a large profit in AIA. In order to pay back the US government, AIG will have to sell profitable units like AIA. How will the company be of value when its most important parts are sold?
b) The drop in revenue makes sense. With the current soft market, the company probably has an unprofitable book of business in many of its property and casualty division(s). The company is faced with walking away from unprofitable business or dramatically raising rates. With the abundant amount of capital, the market will continue to remain soft for the long term. This will force the company to continue losing renewal business and being uncompetitive on new business. The drop in US revenue will continue from property/casualty operations will continue….
c) The 2nd quarter combined ratio is 104. As the tornado/hurricane season continues, this amount might increase. With a combined ratio of 104 (or higher), the company will not be underwriting business for long……