In Defense of AIG - The Insurance Part

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.