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$AIG Bear Case Scenario $XLF, $IAK

AIG continues to face the cyclical risks of insurance companies. When things go bad the industry and AIG suffer. This has not changed.

P&C lines have a long history of under reserving for losses and relying on investment returns to cover shortfalls. Stock market valuations are at all time highs. The returns may not be as robust as actuaries need.

Most insurance companies who operate in both life and property and casualty usually do poorly. These are two separate businesses. Each market has a poor understanding of the other.
AIG does have a large life product exposure. There are many guaranteed products that have been underwritten. With a rising interest rate environment low yield long bonds will make the process look sick. Iceberg straight ahead.

George Gutowski writes from a caveat emptor perspective.

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