“AIG’s been such an outlier in terms of having to take reserve charges while most of its competitors are releasing reserves,” Rob Haines, an analyst at CreditSights, said in an interview. “Ultimately, someone’s going to have to take the blame there.”
Correct, somebody has to take the blame here. But the “sins” writing insurance contracts at unattractive prices and under-reserving the resulting losses from those poorly priced insurance products, were done well before Hancock came on board. Perhaps Hancock was the wrong guy to pick to fix those problems having zero insurance experience, but the fault lies with his predecessors starting with Hank Greenberg who instilled a “better make your numbers mentality” which still exists there today. Hancock’s lack of understanding of the business made him the wrong person to fix the problem, but he did not create it. and to imply in any way he did is wrong.
His first problem is he is a banker who does not understanding the intricacies of the insurance business — risk, financial performance, lines of business, liabilities, etc. His second problem was decimating his experienced leadership ranks to save money with junior/inexperienced people or technology. The final straw was how poorly he understood or managed expectations.
Let’s hope they go with an outsider, an insurance person, or else they might as well sell the company.
This is all very interesting, but I’m still trying to figure out how a company that has been lent a few hundred billion dollars by the US government managed to PAY IT BACK and come out with a positive net worth.
Of course, I’m not very savvy financially, only have a MBA in finance, but it strikes me as very puzzling that we are even talking about worth.
Did AIG start charging $3 million minimum premium per policy since it was lent the money? I’m not certain how else it happens. Perhaps someone can explain it top me, as I am a very simple person.
The government received 92% of AIG’s stock. As the company regained its footing, and the stock price rose, they sold off their shares. They came out with a gain of $22.7B.
The answer to your question is in Bob Benmosche’s book “Good for the Money”. The issue was never that AIG had no intrinsic value, but it had a huge cash flow issue at a time when the credit markets were frozen. They did in fact pay all of the money back that they borrowed under TARP, with a 22 Billion dollar profit to the US Government. Bob Benmosche was our Moses for sure.
AIG sold some of its business units that are not aligned to it’s core business, like the aircraft leasing unit. Total employees in 2008: ~120K, in 2012 ~65K, and they didn’t layoff many folks. Only sold the business units.
Petey has done a fine job. He collected 12milion per year in salary and now gets a $30million severance package for resigning so the company doesn’t have to fire him and endure additional financial harm. He has chased off many top talented staff and they are getting more Brain Dead by the day. AIG will never get on track until they have an insurance professional on board and get back to the basics of insurance.
Ole Petey has been burning through $60million a year on unproven Insurance Underwriting Science in AIG’s Science division. So lets see if the math is correct, $12m salary for 3 years, plus the 30mil severance package, $60m annually on the lol-Science Team and $50m for an operating system that still does not function. Petey boy has cost AIG $296ml in one single division of the AIG ship since 2014. I think we should all stand up for a big round of applause to Mr. Handcock as has mastered the art of applying Lipstick to a Pig.
“AIG’s been such an outlier in terms of having to take reserve charges while most of its competitors are releasing reserves,” Rob Haines, an analyst at CreditSights, said in an interview. “Ultimately, someone’s going to have to take the blame there.”
Correct, somebody has to take the blame here. But the “sins” writing insurance contracts at unattractive prices and under-reserving the resulting losses from those poorly priced insurance products, were done well before Hancock came on board. Perhaps Hancock was the wrong guy to pick to fix those problems having zero insurance experience, but the fault lies with his predecessors starting with Hank Greenberg who instilled a “better make your numbers mentality” which still exists there today. Hancock’s lack of understanding of the business made him the wrong person to fix the problem, but he did not create it. and to imply in any way he did is wrong.
That is right. the word of “Tech” in insurance should be totally different from Valley.
His first problem is he is a banker who does not understanding the intricacies of the insurance business — risk, financial performance, lines of business, liabilities, etc. His second problem was decimating his experienced leadership ranks to save money with junior/inexperienced people or technology. The final straw was how poorly he understood or managed expectations.
Let’s hope they go with an outsider, an insurance person, or else they might as well sell the company.
integrity, I know some banks that now wish they hadn’t bought some insurance agencies as well. It is like mixing water and oil. Not a good fit.
This is all very interesting, but I’m still trying to figure out how a company that has been lent a few hundred billion dollars by the US government managed to PAY IT BACK and come out with a positive net worth.
Of course, I’m not very savvy financially, only have a MBA in finance, but it strikes me as very puzzling that we are even talking about worth.
Did AIG start charging $3 million minimum premium per policy since it was lent the money? I’m not certain how else it happens. Perhaps someone can explain it top me, as I am a very simple person.
The government received 92% of AIG’s stock. As the company regained its footing, and the stock price rose, they sold off their shares. They came out with a gain of $22.7B.
The answer to your question is in Bob Benmosche’s book “Good for the Money”. The issue was never that AIG had no intrinsic value, but it had a huge cash flow issue at a time when the credit markets were frozen. They did in fact pay all of the money back that they borrowed under TARP, with a 22 Billion dollar profit to the US Government. Bob Benmosche was our Moses for sure.
AIG sold some of its business units that are not aligned to it’s core business, like the aircraft leasing unit. Total employees in 2008: ~120K, in 2012 ~65K, and they didn’t layoff many folks. Only sold the business units.
Petey has done a fine job. He collected 12milion per year in salary and now gets a $30million severance package for resigning so the company doesn’t have to fire him and endure additional financial harm. He has chased off many top talented staff and they are getting more Brain Dead by the day. AIG will never get on track until they have an insurance professional on board and get back to the basics of insurance.
Ole Petey has been burning through $60million a year on unproven Insurance Underwriting Science in AIG’s Science division. So lets see if the math is correct, $12m salary for 3 years, plus the 30mil severance package, $60m annually on the lol-Science Team and $50m for an operating system that still does not function. Petey boy has cost AIG $296ml in one single division of the AIG ship since 2014. I think we should all stand up for a big round of applause to Mr. Handcock as has mastered the art of applying Lipstick to a Pig.
former, you summed it up nicely.
I did got away with 100M and no one is talking about it….hehehee