Heavyweight AIG Down But Certainly Not Out

AIG head exec, Edward Liddy, has vowed to not let the crown jewel go to the auction block. Commercial Insurance is not up for sale. According to BusinessWeek:

But the $52 billion business may be losing its luster. Customers are nervous about AIG’s future, and competitors are rushing to capitalize on AIG’s battered reputation amid an $85 billion federal bailout following massive subprime losses, and an additional infusion of $38 billion from the Federal Reserve Bank of New York to cover the company’s other obligations. Industry headhunters say competitors are courting top AIG underwriters, who play a critical role in the relationship-driven industry.

The battle has already morphed into a price war. Insurance brokers whose clients’ policies came up for renewal on Oct. 1 say AIG slashed premium rates by as much as 50% on key accounts, though the company says rates have not changed materially overall. Rivals are offering discounts of up to 20% to woo people away. Within the industry, AIG’s air of desperation is palpable. “Competitors smell blood,” says Cliff Gallant, an analyst with Keefe, Bruyette & Woods (KBW), “and they are trying to steal that business as quickly as they can.” For full article click HERE