Economic problems

This on Treasury’s pending sale of AIG stock, from the Washington Post, made me laugh: The remaining federal commitment consists of the Treasury Department’s majority share of AIG stock. There’s good news on that front, too: On Wednesday, Treasury announced that it plans to sell $6 billion worth of its stake. Cleverly, Treasury sold about [...]

Chief Science Officer – an actuarial role?

I’ve always been concerned that casualty actuaries paint themselves into a box, in no small part because they have a decade-long education process that, among other things, requires one to memorize large swaths of P&C arcania, like the Annual Statement. The advantage: It makes casualty actuaries well-prepared for any traditional challenge they are likely to [...]

The AIG saga: ERM lessons

I reviewed Fatal Risk: A Cautionary Tale of AIG’s Corporate Suicide for Contingencies magazine this month. To quote myself: Boyd, a veteran Wall Street journalist, writes that AIG’s demise was a suicide, though AIG’s behavior was no more suicidal than a chain smoker’s—a series of unforced errors compounding. Though he doesn’t emphasize it, Boyd’s story [...]

Berkshire gobbles up AIG’s asbestos reserves

Shouldn’t have been surprised by this one. Bloomberg with the call, via Business Week: April 20 (Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. will get $1.65 billion from American International Group Inc. for assuming the risk of asbestos policies from the bailed- out insurer. The deal with Omaha, Nebraska-based Berkshire’s National Indemnity will result in [...]

The importance of loss reserving in one chart

  AIG is such a big company, and its reserves have deteriorated so much in recent years that with yesterday’s release of its 10-K, I decided to look here and here. Yipes! I took a couple of shortcuts, but they don’t affect things much. I haven’t adjusted for the discount in loss reserves, which is [...]

Will the government profit on the AIG bailout?

AIG says it will. I’m hardly the expert on the AIG bailout, but way too many people thought we had just shoveled buckets of money over to the enterprise because it bet wrong on mortgages. The company had two related crises. It’s bet on the mortgage industry (guaranteeing credit default swaps) lost a lot of [...]

A show I would watch

In an interesting dissection of where AIG will get the money to pay off its $725 million class action settlement, D&O Diary throws out this tidbit: Somehow it seems fitting that just this past week there were news reports that during a recent lunch at the Four Seasons Hotel in New York, where [ex-AIG chairman [...]

Enter Hank the Sixth

In the early aughts, as I think I’ve blogged before, I always heard that “only Hank could run AIG.” Hank Greenberg, that is. Hank, of course, got forced out in 2005. Since then the company has melted down completely and damn near took the rest of the world’s economy with it. Fitch this week nudged [...]

June 18: Elsewhere among the actuaries

California gets tough on health rate filings. I don’t think AIG had as much to do with ending the last soft market as Osama bin Laden, but others are free to disagree. Medical marijuana raises EPLI issues. Compensation practices at insurers are grim these days. This article says some rather obvious stuff about Solvency II, [...]

AIG reserving, continued

Stock analyst David Merkel at The Aleph Blog follows up on his previous post about AIG reserving practices with this chart: ACE — ACE Limited BRK — Berkshire Hathaway CB — Chubb CINF — Cincinnati Financial CNA — CNA Financial MKL — Markel PRE — PartnerRe TRV — Travelers WRB — W. R. Berkley WTM [...]