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	Name:	GoneFishin -
	Subject:	AIG Needs
	Date:	3/25/2009 12:11:48 PM

AIG has many varied divisions around the world. The insurance division that underwrites auto, homeowners, business insurance, and accident coverage continues to do fairly well. The problems associated with AIG are not impacted by the regular lines of insurance. Rather, a division was established a few years ago that provided insurance against a decline in credit quality in the form of credit defualt swaps.

When a company writes typical insurance coverages, they are regulated by 50 different state insurance departments that require the Company maintian a specific level of reserves for the rainy day should big losses incur. Reserves are investments set aside that cannot be paid out as dividends or used for expenses. Companies also buy reinsurance through other companies to share large losses. Reserves would be like the money you maintain in a money market or other investment if your lost your job and needed money to live on.

Well, the swaps were unregulated and the division was actually located in London as I understand. They wrote "insurance" and generated huge premiums and profits. Basically, you bought alot of coverage for small premiums and there were no regualations. The president of AIG Hank Greenberg was forced out a few years ago and he ran tha Company hands on. With his leaving the business was really too vast and complicated for the Board of Directors and the top officers.

When Companies asked for payments as credit deteriorated, AIG did not have the funds to pay. The bailout has given them the money to pay claims for the swaps.

The link is a good article to get a better understanding of AIG issues.

URL: URL Link

Other messages in this thread:

View Entire Thread

AIG Needs - lotowner - 3/25/2009 9:11:30 AM

AIG Needs - Council Roc Doc - 3/25/2009 9:48:44 AM

AIG Needs - Council Roc Doc - 3/25/2009 9:56:35 AM

AIG Needs - GoneFishin - 3/25/2009 12:11:48 PM

AIG Needs - lakngulf - 3/25/2009 12:22:06 PM

AIG Needs - lotowner - 3/25/2009 1:40:54 PM

I have changed my view - Talullahhound - 3/25/2009 3:17:16 PM

I have changed my view - Council Roc Doc - 3/26/2009 10:12:24 AM

I have changed my view - Talullahhound - 3/26/2009 5:55:16 PM

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