This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

AIG Competition Can't Take Advantage

Net premiums written in AIG's general insurance business declined 16.3%, while premiums, deposits and other considerations in its life insurance and retirement division dropped 38.5%. General insurance -- which includes commercial, catastrophe, workers compensation and foreign insurance, as well as investments related to those businesses -- posted an operating loss of $2.8 billion, vs. a profit of $2.1 billion a year ago, excluding capital gains and losses. Operating income from AIG's life insurance and retirement business plunged 73% to $742 million from $2.7 billion.

"They're struggling to retain confidence both with employees and with customers," says Bill Bergman, who analyzes the company for Morningstar. "And competitors are concerned that this is irrational pricing, in their minds."

AIG spokesman Peter Tulupman disagrees, saying the company's commercial insurance operations, were remarkably successful, given the situation for AIG and the broader markets. AIG rolled those operations into a new entity called AIU Holdings, which recorded $4.4 billion in net premium underwriting in the fourth quarter, and $21.2 billion for the full year.

Tulupman also notes that AIU's statutory policyholder surplus -- a mandatory reserve that insurers must hold against claims -- rose by 1.1% and is higher than all U.S. competitors, and cites AIU's "excellent" financial strength ratings, which were affirmed by AM Best, S&P, Moody's and Fitch on Monday.

"Given the economic environment, market conditions and AIG's ongoing issues, commercial insurance performed well in 2008," Tulupman said. He characterized it as a "well-capitalized businesses that holds substantial liquidity and has not required capital funded through AIG's agreement with the U.S. government to support its financial strength."

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs