AIG Huge 2nd Qtr Loss - another 5 Billion

Aug 7, 2008

  1. SportsNut
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    SportsNut Guru

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    AIG's involement in the Credit Default Swaps market is proving very costly... another 5 billion loss for Q2. Do they have ahold of the anchor that could drag them to the bottom...?

    AM Best downgraded them on their last batch of qtrly news. Wonder what impact this latest news will have on their credit and other ratings...?

    Essentially they have guarenteed these mtg portfolios to large lenders for a premium. Essentially wholesale mtg insurance. Their shares dropped 8% on the day, as a result.

    How much more downside could there be...? How will this effect your present (and future) policy holders...? Something to think about.

    AIG's huge 2Q loss shows credit market woes linger: Financial News - Yahoo! Finance
     
  2. somarco
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    somarco GA Medicare Expert

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    Like all carriers, AIG reinsures their xs risk, they have reserves and most of their products are covered by state guaranty funds.

    They are not the first carrier to be caught up in the real estate meltdown. Baldwin United, CNA, Equitable and Mutual Benefit all suffered due to real estate deals gone bad.

    AIG is probably large enough to weather this storm. If not, they will be snatched up by a European conglomerate and move forward.

    A dozen years ago or so very few in the US had heard of Fortis, ING or Axa.

    European carriers are better managed and tend to take long term views, planning 30 years out. US carriers are more opportunistic and focused on short run moves.
     
    somarco, Aug 7, 2008
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  3. padthaiforlunch
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    padthaiforlunch Guru

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    This.

    If you look at the balance sheet, their debt-to-asset ratio is out of whack, and current assets continue to shrink. You have to wonder what their off-balance sheet items look like.
     
  4. SportsNut
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    SportsNut Guru

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    Ah, you mention a relic from the past... Baldwin... or known as Baldwin United. A conglomerate of 200 fincl services companies when it finally hit meltdown, at warp speed. Grown out of the Baldwin Piano Co., of all things.

    Funny event occured back in the mid 80's. We were looking for office space as a Financial Planning firm. The agent was showing us Class A space... unlocking the door... and a fellow was coming out of the suite next door... I thought to myself, he looks quite familiar... It hit me who he was... Morley P. Thompson, former architect of the Baldwin United mess. I quietly told the agent that we would have to pass on the space as many folks in Cincinnati had exposure to B/U annuities and had gotten hurt. We could hardly be in an adjoining corridor where our front doors were next to one another...

    Next.
     
  5. Winter_123
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    Winter_123 Guru

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    Indeed. Aviva, Allianz etc. as well.

    Winter
     
  6. Bozack23
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    Bozack23 Super Genius

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    How much should a newbie looking to join AGLA let this huge loss effect his decision. I would assume,at worst, the windows wouldn't get boarded up but another company would buy them. At that point not much would change at the office level?
     
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