From Harvey to the wildfires of 2018, now covid and this year’s wildfires... seems like AIG might be at it’s breaking point??
3 replies (most recent on top)
Isn't this a problem for all insurers, why just AIG?
I think they quickly realized they don’t know how to fix AIG. From that point it just became a strategy to drag out the losses and get paid as long as possible. That plan is fine with me. I don’t plan to retire here. There is no coherent plan to fix AIG.
The question is how long will reinsurance companies keep taking AIG losses?
The first thing BD did was reinsure a large amount of exposure on the AIG book to preserve capital. This a great way to make sure the coffers don’t take a huge loss from any catastrophe. Unfortunately, it makes it very hard to turn a profit because it’s expensive.
The great thing for BD is that these reinsurance companies are run by friends and family so it’s a win win for BD. Protect his large salary at AIG and pay huge premiums to reinsurance companies that funnel money back to BD. Cha Ching!
Instead of actually writing good business, just keep the premiums flowing. This Is why AIG can’t turn a profit and the stock is at $28.
Ever wonder what happened to the “year of the underwriter?” They realized they didn’t know how to fix it so they reinsured it.
It will be interesting when BD retires. If the reinsurance retires with him, AIG is in big trouble.