American International Group (NYSE:AIG) is about to issue earnings results. Ponder this Bear Case Scenario:
Property & Casualty (P&C) lines have a long history of under-reserving for real claims loss experience. Catastrophe’s usually blow these companies away. They all rely on investment income to skate themselves on side. AIG is still no different in this regard.
Life Insurance and P&C Insurance are two separate businesses. Companies who operated in both did poorly in the last melt down and probably will do poorly in the next financial crisis. C’est la vie!
Any detrimental moves in the nascent housing market will hurt AIG’s mortgage insurance operations.
George Gutowski writes from a caveat emptor perspective.