Why use COMDEX when the ratings agencies are free?

[Newby]

I dont think that is entirely true, but could be I guess. I thought it was more about how AIG was investing their money in credit default swaps. AIG was also lending out securities owned by their life insurance company. They then took the cash pledged as collateral from the company that borrowed the securities & bought high risk & high yield investments rather than investing in safer investments normally held by insurance carriers. These tended to be high risk sub prime residential loans. So, when the borrowers of the securities returned them to AIG, they no longer had the cash held as collateral to give back to the borrower because they had tied it up in illiquid real estate holdings.

You are probably correct. It’s way above my pay grade.

I was always amused that the wonderful “state guarantee funds” couldn’t just kick in and bale them out.

 

[Allen Trent]

You are probably correct. It’s way above my pay grade.

I was always amused that the wonderful “state guarantee funds” couldn’t just kick in and bale them out.

I believe the dirty little secret of those guarantee "Funds" is that they actually have 0 in funds. Really only a guarantee that they will attempt to get surviving carriers that may have better business practices & disciplined investing to step up & provide the funds to the failing carriers customers.

I think taxpayers bailing out AIG actually worked great for AIG & the taxpayers

 

[rousemark]

You are probably correct. It’s way above my pay grade.

I was always amused that the wonderful “state guarantee funds” couldn’t just kick in and bale them out.

The guarantee funds do not "kick" in until a company is actually declared insolvent and placed into receivership. The funds are designed to "bail" policyholders out, not companies..

 

[rousemark]

I believe the dirty little secret of those guarantee "Funds" is that they actually have 0 in funds. Really only a guarantee that they will attempt to get surviving carriers that may have better business practices & disciplined investing to step up & provide the funds to the failing carriers customers.

I think taxpayers bailing out AIG actually worked great for AIG & the taxpayers

It is an assessment system.. The solvent companies are assessed as necessary in order to protect policy holders. The solvent companies can participate or lose their license to do business in the sate.. As for AIG, taxpayers actually made money on the deal and the insurance companies were never in trouble.. It was the banking and investment companies that were about to go down which would have had a huge domino effect throughout the investment industry..

 

[Allen Trent]

It was the banking and investment companies that were about to go down

I don't believe that is entirely accurate. The insurance companies were involved by lending the securities it held in its portfolio and also investing some of their monies in the riskier assets. But I could be remembering some of those aspects incorrectly.

Especially if the Life company invested it surplus assets in owning those investment & banking subsidiaries

 

[rousemark]

I don't believe that is entirely accurate. The insurance companies were involved by lending the securities it held in its portfolio and also investing some of their monies in the riskier assets. But I could be remembering some of those aspects incorrectly.

Especially if the Life company invested it surplus assets in owning those investment & banking subsidiaries

Well, I was with AGLA at the time and they were saying our assets were totally separate and the crisis had no effect on us.. The bilk of the insurance companies investments were in bonds.. While the insurance companies were subsidiaries of AIG, their assets could not be raided by the parent. Have to say this all above my pay grade and I have to depend on others that supposedly know what they are talking about.