Rating agencies are just the latest to have the company in their sights: Moody’s, AM Best, and Standard & Poor’s (S&P) have all taken aim in the final days of January.
AIG had its outlook changed to negative by S&P; Moody’s downgraded the ratings of the insurer’s North American property and casualty (P&C) business; while AM Best put AIG’s ratings under negative review, pending more details of the company’s strategic plans.
The rating agencies’ fire was a response to several developments. AIG announced late in January it would be making a $3.6bn strengthening of its reserves – certainly a big enough indicator of problems to warrant raters’ concerns.
Some $1.2bn has been added to the reserves of its excess casualty business, reflecting deterioration
On January 26, AIG’s board had announced a striking blueprint
Chief executive Peter Hancock (pictured) pledged to return $25bn to shareholders in the next two years. As part of the
Pleasing shareholders – particularly the irksome, disruptive sort – has been an acute concern for Hancock. Activist investor Carl Icahn’s accusation that AIG is “too big to succeed” – calling for its breakup and threatening a shareholder putsch to depose Hancock if the CEO refused – helped trigger its new blueprint, going much further than earlier announced management cuts and regional business selloffs.
Hedge fund manager John Paulson added his words to those of Icahn. To raise its stock, they say they want AIG to shrink so much it might shed its unwanted status as a non-bank systemically important financial institution (
However, AIG’s activist investors are either not entirely honest, or they are deluding themselves. AIG’s
It doesn’t matter that it is several years since September 2008, or that AIG is unlikely to revisit its toxic turn selling credit default swaps on
MetLife knows this. In 2012 the US life and health insurer sold its banking business to GE Capital and its mortgage arm to JP Morgan Chase, vying to shed the
MetLife’s plan is to separate much of its US retail segment, considering a public offering of shares for a new independent company or a private sale. “Even though we are appealing our Sifi designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation of the business,” MetLife said in a statement.
Sifi designation seems as arbitrary as it is opaque. For example, since Ace acquired Chubb, why is the new expanded Chubb not a Sifi? And in the context of MetLife’s exertions, why did Aegon join, and Generali exit, the updated list of
AIG’s slimming blueprint might turn around its performance, cut costs, up its profits and streamline its sprawling global structure. That