In Defense of AIG – The Workers Compensation Part
The defense of AIG for the insurance part of the company made me hesitate. I had written this post a few weeks ago. I was just not sure that I wanted to take the heat of defending one of the most hated companies in America.
I am not defending the investment part of AIG that was their downfall. The property and casualty arm of the company has done/will do very well in the future. AIG’s management of their insurance division is very strong and forward-thinking. Their property and casualty marketing, underwriting, and claims departments have all performed at or better than the competition.
AIG has become very assertive on their workers comp audits. I have noticed this trend over the last two years. This is not out of line with most of their competitors.
One of the questions I have heard very often lately is “Will AIG survive?” AIG is now changing their name to AIU. This may be a good strategy. However, people will associate AIG with failure for years to come. I read an article today where AIG insurance personnel were glad to get the crisis behind them. They were unfairly associated with the failures of other parts of the company. I know quite a few AIG employees on the insurance side of the business that are at the top of their game.
I do not think that AIG will completely fail. I also think that AIG will pay back what has been lent to them by the US government. The payback period may be over 20 years. I do not think that AIG can keep their investment companies going very much longer. Any company that could come up with credit swaps as a way to hide losses should not be allowed to survive.</>
I disagree that the AIG bailouts did not allow them to make lower bids and to underprice the competition. I have seen that first-hand. The NAIC study that was performed on this subject made the assumption that they did not have an advantage. Being a statistician, I can tell you that if you make a presumption, you can always find certain statistics that will prove your point.
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