AIG’s Continuing Drama

AIG has temporarily dodged a bullet but has a long, uphill road to regain investor and client confidence. Their insurance operations are still strong and have maintained a good rating for now. I received an additional email from AIG yesterday evening, but instead of reciting repetitive information I will merely offer a few highlights:

Here are some additional things to keep in mind as we evaluate AIG as a viable insurer:

• It is important to remember that AIGCI’s subsidiaries, including Lexington, National Union and American Home, continue to be well capitalized with statutory surplus of $26.7 billion and invested assets exceeding $70 billion.
• AIGCI has ample resources to pay policyholder claims, paying $73 million in claims every single day.
• AIGCI’s statutory surplus has grown over 50% since 2005 to $26.7 billion, exceeding the total shareholders’ equity of all domestic commercial insurance holding companies.
• AIGCI’s Net Written Premium to Surplus Ratio, a key indicator of the amount of leverage of a property casualty organization is <1.0 with total NWP of $12.7 billion compared to policyholder surplus of $26.7 billion at the period ending June 30, 2008.
• AIGCI’s financial strength ratings are excellent and higher than many commercial insurance companies.