AIG Insurance

[NHB_MMA]

I haven't seen any stock companies with an A+ or A++ rating go down the drain.

No, not of that size. I don't think anyone can expect to see significant changes in a company like AIG in the next 5 or 10 years. A lot can happen over the next 50 years or more. I think some companies are going to take in on the chin big-time in the life industry, but that's just my theory (boils down to I think people have pretty much peaked their life expectency with their sedentary lifestyle and companies think the average lifespan is going to increase significantly) and would require a different discussion.

The most common mistake made by stock companies, IMO, is acquiring companies too fast and getting burned. I don't believe AIG has followed this model. Theoretically, any stock company can change significantly over time. I remember in my business classes talking about how the Kroger Corporation was facing a takeover of their grocery stores and incurred debt to make the deal less attractive or something like that (been many years). Just not something I want out of my permanent life coverage. I probably won't live to a ripe old age, but if I do I want to make sure that asset is as dependable as anything in life.

 

[NHB_MMA]

Your NYL bias is really showing in your comments.

I suppose I have biases and planning ideas I lean towards...which makes me about like most everyone else here. A "one size fits all" mentality is an epidemic in this industry, from what I've seen, even with people I've talked to outside the forum and within my own office.

Yes, AIG was downgraded last year to A+ by A.M. Best. They are now back to A++ by A.M. Best. The downgrade had to do with the Elliot Spitzer probe into their commercial insurance unit which has all been cleared up now. To my knowledge they have never been B rated. In fact, in the nearly 18 years I've been in the business, I don't recall anything below A+.

I was mistaken in assuming that those comments were an A.M. Best rating. I do remember reading about the downgrades, which were in part due to falling short of projections. I already addressed this in replying to Melmunch.

You stated you were basing this information on something you "think" someone "may" have written on the old forum (that's a very dangerous way to conduct your due diligence).

Okay, I know I read something about it on the old forum. If I were presenting before the DOI, I would have greater details, but for the informal conversation here I just made reference to an old post.

And then you state that you just assumed it was A.M Best they were speaking of and it could have been another agency since A.M. Best is the "most lenient".

I admit I assumed. A.M. Best is most often cited when it comes to ratings. Clearly, it was NOT A.M. Best that gave them a B rating. It could have been Weiss (which has them rated at C+) or some rating service rarely quoted that is a real ballbuster of a rating agency.

Sman, what's your deal? If I write "I will not sell VUL" 500 times on the blackboard, do I get off your sh*t list?

I'm not attempting to compare them with NYL, Northwestern or any other mutual company.

Fair enough.

Just stating some facts that are very easy to come by without having to read it on a message board and make assumptions.

I am aware of their current ratings and they're very good.

In addition, your comments about never getting permament coverage with a stock company further proves your bias. Purely an opinion and falsehood touted by those that work with mutual companies.

Bullsh*t! I will grant you that permanent coverage from a company the size and strength of AIG is highly secure. Not guaranteed, as nothing truly is, but highly secure. However, there are too many agents out there selling ULs and even WLs from small companies that are one step up the ladder from a fly-by-night operation.

There is an added layer of security in a mutual company that the company can never change over to a stock company (and thus change some investment objectives from long-term to short-term) without policyowner vote. Unfortunately, some mutual companies have done that, but it remains an added layer of security and that idea is not some "falsehood".

Please name some of these highly rated stock companies that you have seen go down the drain.

I don't know if they ever achieved the A++ rating, but Conseco and Kemper were a couple of giants that are pretty much on life support. When I was licensed in the late 90s, everyone was touting Conseco as the real deal. Just shows what bad management and poor acquisitions can do. When I looked a while back, many of those subsidiary companies were like C rated, which basically means you're not answering the phones anymore.

I would recommend you get your facts straight before spreading false information about a company's ratings and products.

I didn't spread ANY false information about products. I made an incorrect assumption about a rating and acknowledged that long before you added your drama to this thread.

 

[NHB_MMA]

I don't have a dog in this fight, but I do recall a few "highly rated" carriers who are no longer with us.

Baldwin United was one. They may have been A or slightly lower at their height. They peddled a lot of annuities (group & individual) to retirement plans with some outrageous guarantees that were never fulfilled. No one lost money, but they ended up with much less in accumulation than expected. Also, they had to postpone receipt of their funds in order to preserve the principle.

The most noted carrier to fall from grace was Executive Life. Once an A+ (or maybe A++) carrier, they bit the dust in 1991. Lots of cheap term, very little in reserve.

CNA is another, a bit more recent. They were hurt mostly by their P&C side. The only thing making a profit was their life side which was bought by Swiss Re.

Probably a few other carriers, but these were the most noteworthy.

Yes, some large operations have folded over the years. "Guaranteed" permanent coverage is as good as the company guaranteeing it, unless there is some agreement where a third party will guarantee it.

Of course mutual companies are not immune. Remember Mutual Benefit? Remember the "run" that made the 6 o'clock news where they actually closed the doors to the lobby to keep folks from cashing in their policies?

No they're not immune. There are no guarantees in life, no matter what anyone says. A stock company can provide an incentive for a person to cook the books, change long-term focus to short-term focus, etc. Even in the insurance industry, these companies are susceptible to the the Enron/Tyco/Worldcom syndrome, albeit the chances are slim with a large company. There is also the fact that stockholders are voting on the decisions that policyholders vote on in a mutual company. Again, it's an added layer of security and control, not a guarantee by any means.

Other mutuals that are no more, not because of financial issues, include Canada Life, John Hancock, MONY, New England Mutual, Unionmutual, Pru & Met (both formerly mutual companies, now converted to stock companies).

I think it's a shame. I was glad to see State Farm didn't go that route.

And who would have thought that GE would become a powerhouse in financial services? They make light bulbs for crying out loud.

That IS strange. I'll post an honorary light bulb.

 

[James]

I was mistaken in assuming that those comments were an A.M. Best rating. I do remember reading about the downgrades, which were in part due to falling short of projections. I already addressed this in replying to Melmunch.

If you're saying this in reference to AIG I think you need to learn how to read. They were downgraded from A++ to A+ for a short duration as Spitzer (the weasel of NY that likes to play fast and loose for political gains) was investigating Greenberg, which was nothing there against Greenberg the long standing CEO of AIG. Also in the mix was Guardian/Hathway and Reinsurance that seem less then correct as long with Warrne Buffet, obviously Spitzer had his mouth watering thinking he was going to get a lot of press with names as Buffet/AIG and Guardian-Hathaway Corporation (Buffets very own machine).

 

[sman]

I suppose I have biases and planning ideas I lean towards...which makes me about like most everyone else here. A "one size fits all" mentality is an epidemic in this industry, from what I've seen, even with people I've talked to outside the forum and within my own office.

How do we get from AIG is a B rated carrier to the "one size fits all" discussion? But while we're here, I am definitely not a one size fits all guy. And it works both ways. There are those that believe term is the only way to go. And there are those that believe permanent is the only way to go. My belief is whatever best fits the need the most cost efficient way is the right way to go.

Okay, I know I read something about it on the old forum. If I were presenting before the DOI, I would have greater details, but for the informal conversation here I just made reference to an old post.

Problem is, some newbie or consumer stops by the forum and sees the info you posted and could assume you are right. I think the truth is worthy to be posted here.

I admit I assumed. A.M. Best is most often cited when it comes to ratings. Clearly, it was NOT A.M. Best that gave them a B rating. It could have been Weiss (which has them rated at C+) or some rating service rarely quoted that is a real ballbuster of a rating agency.

I have no idea what the Weiss rating is for any of the AIG companies. I'd be curious to know which one it is you have stated has a C+ rating?

Sman, what's your deal? If I write "I will not sell VUL" 500 times on the blackboard, do I get off your sh*t list?

So now we're talking about VUL's??? Where'd that come from? I have no problems with VUL's when sold in the proper situation.

Bullsh*t! I will grant you that permanent coverage from a company the size and strength of AIG is highly secure. Not guaranteed, as nothing truly is, but highly secure. However, there are too many agents out there selling ULs and even WLs from small companies that are one step up the ladder from a fly-by-night operation.

Man, stick with one argument. First we're talking about AIG and then we're talking about "fly-by-night operations. Whoever said anything about those carriers?

There is an added layer of security in a mutual company that the company can never change over to a stock company (and thus change some investment objectives from long-term to short-term) without policyowner vote. Unfortunately, some mutual companies have done that, but it remains an added layer of security and that idea is not some "falsehood".

The falsehood is that a whole life with a mutual company is superior to a UL with a stock company.

I didn't spread ANY false information about products. I made an incorrect assumption about a rating and acknowledged that long before you added your drama to this thread.

When you imply that someone is better off with a product from a mutual company than with a stock company, that to me is a falsehood. You call it what you want, and I'll call it what I want.

Don't get me wrong, I've seen policies with Northwestern Mutual that have done very well over the years with their dividends. But I can't make a blanket statement that a person is better off with a policy from a mutual company than a stock company. I also can't make a blanket statement that a person is better off with a stock company than a mutual company. One of those one size fits all statements I tend to avoid.

 

[James]

Well I do believe if someone wants a Participating W/L contract they are best off dealing with Mutual's! So I suppose we should put that one to bed.

 

[sman]

Well I do believe if someone wants a Participating W/L contract they are best off dealing with Mutual's! So I suppose we should put that one to bed.

James,

I agree. However, how many people come to you and ask for a Par WL? In nearly 18 years I've never had someone ask for one.

 

[James]

Well I do believe if someone wants a Participating W/L contract they are best off dealing with Mutual's! So I suppose we should put that one to bed.

James,

I agree. However, how many people come to you and ask for a Par WL? In nearly 18 years I've never had someone ask for one.

LOL, I was being funny as buying Par W/L from another source.

 

[NHB_MMA]

If you're saying this in reference to AIG I think you need to learn how to read. They were downgraded from A++ to A+ for a short duration as Spitzer (the weasel of NY that likes to play fast and loose for political gains) was investigating Greenberg, which was nothing there against Greenberg the long standing CEO of AIG. Also in the mix was Guardian/Hathway and Reinsurance that seem less then correct as long with Warrne Buffet, obviously Spitzer had his mouth watering thinking he was going to get a lot of press with names as Buffet/AIG and Guardian-Hathaway Corporation (Buffets very own machine).

I wasn't referring to the link you posted earlier, and did not even take the time to look at it. I was just talking about general uncertainty around the company a while back. I NEVER mentioned anything about that anti-capitalist slimeball Spitzer. I said I remember reading about the downgrades a while back. From a Weiss rating (admittedly they seem like ballbusters) read the following:


"AIG Life Insurance Company (Wilmington, Del.) was lowered to C+ (Fair) from B- (Good) based on a steady decline in earnings since December 2000. Net income decreased from an $18.7 million loss in 2000 to a $37.3 million loss for the first nine months of 2002. Contributing to the loss was a steep decline in premium income, from $1.4 billion in 2000 to $812 million in the first three quarters of 2002."

SOURCE: http://www.weissratings.com/News/Ins_General/20030226general.htm

James, I can read.

 

[dvd493]

I just signed up as an agent with AIG and have there software but, I have no idea what product is the mortgage protection. I don't understand the program at all.