Author Topic: AIG - American International Group  (Read 615421 times)

Gregmal

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Re: AIG - American International Group
« Reply #1980 on: October 18, 2018, 06:58:08 PM »
This is a dumpster fire. While I once loved this and did very well with the investment, deciding to sell the day Bob left was a great move. This is just a horribly run company, with a brand that isn't what it once was, and destroying so much value in the process. That and it seems anyone worth a dime at AIG is either poached by Berkshire or leaves for anyway.


Cigarbutt

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Re: AIG - American International Group
« Reply #1981 on: October 19, 2018, 05:38:50 AM »
When a stock goes down and it's mostly a temporary and fixable issue, it may make a lot of sense to buy.
Not here though IMO.

Property casualty insurers are like banks, in a way, in the sense that they typically have a block box component that is very hard to figure out even if one dissects the reserve triangles and in the sense that there is a trust component related to the fact that the reality of the balance sheet numbers will only be discovered over a relatively long period. Based on its historical record, reported numbers and industry dynamics, I expect AIG to do poorly on an absolute and relative basis.

Reviewing the numbers at AIG is a sore reminder that the (re)insurance industry as a whole is struggling to achieve strong returns. Why is that?

AIG was bailed out based on a liquidity event and further developments showed that the solvency issue, although very significant, was only relative. This relative solvency issue however IMO is at the root of AIG's travails and the industry's idleness.

When one looks at the overall "return" on the bailout "investment", some report a positive number. The more conservative include an opportunity cost with a very narrow definition. I would offer the opinion that saving AIG was the right thing to do but the following unintended consequence of zombie survivals has, so far, not been appreciated fully.
https://fas.org/sgp/crs/misc/R42953.pdf

"CBO does not, however, regularly perform cost estimates on Federal Reserve actions."
Perhaps somebody should.