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Today’s News: AIG Reports $2.66 Billion Loss, Missouri Refuses Health Care Reform Law and Questionable Auto Insurance Claims Increase

Posted in AIG , Auto Insurance , Health Insurance , Life Insurance

August 20th, 2010
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AIG reported a $2.66 billion loss in the second quarter, Missouri voters shot down one aspect of the federal health care reform law and a new report has found that questionable auto insurance claims have increased.

AIG Reports $2.66 Billion Loss

Life insurer AIG has reported a second quarter net loss of $2.66 billion, which is a considerable drop from its $1.82 billion loss posted in the first quarter. However, the loss is not from a drop in earnings. It’s instead a result of the loss after selling some of its life insurance divisions to help repay the government bailouts it received in 2008 and 2009.

Aside from the losses posted from selling its companies, AIG’s core insurance companies were able to nearly double their earnings in the second quarter, showing an adjusted net income of $1.34 billion (CNN Money).

Missouri Refuses Health Care Reform Law

Recently, 71 percent of Missouri voters were asked to decide whether they wanted the federal government to require them to purchase health insurance, and they responded with a resounding “No.”

Their votes in opposition to the portion of health care reform law that will require nearly all Americans to purchase coverage or face penalties has set no legally binding precedent. However, the opposition could result in fewer people voting for Democrats in the fall midterm elections, which could shift the balance of power in Congress and impede President Barack Obama’s health care agenda in the long-term (FreeP.com).

Smashed Car Windows Increase Questionable Auto Insurance Claims

According to a new report from the National Insurance Crime Bureau (NICB), questionable auto insurance claims increased by 14 percent in the first half of 2010. This increase was largely due to the fivefold increase in claims from car owners who said that their windows had been smashed.

The NICB says that many policyholders deliberately damage their car windows or stage phony accidents to receive a payout. On a larger scale, almost half of the 7,993 cases of suspected fraud were related to vehicles (Bloomberg).

Today’s News: AIG No Longer Being Probed and FEMA Offers Low-Cost Flood Insurance

Posted in AIG , Home Insurance , Home Insurance Claims

July 26th, 2010
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It seems that life insurance company AIG has been let off the hook in the criminal probe the U.S. Justice Department initiated. For those who live in risky floodplain areas, FEMA is offering low-cost flood insurance options.

AIG Is No Longer Being Probed by the U.S. Justice Department

Recently, the U.S. Justice Department announced that it has concluded its criminal probe into AIG and has chosen not to pursue charges against the insurer or its senior executives. The department pursued the probe originally to determine whether Joseph Cassano, the company’s head, had misled investors when he stated in 2007 that its portfolio of credit default swaps, which led to AIG’s fall and contributed to the financial crisis, would not produce significant losses.

After a two-year investigation, the department determined that there wasn’t enough evidence to bring criminal charges against the company. (CNN Money)

FEMA Offers Low-Cost Flood Insurance for 2 Years

FEMA has been redrawing floodplain maps all over the country, causing homeowners to purchase flood insurance who never had been required to purchase it previously. After many complaints surfaced about the redrawn maps, FEMA decided to help those struggling to pay for coverage by offering low-cost flood insurance to homeowners who live in newly-remapped areas for at least the next two years. FEMA says the cost could be as low as $300 annually, which is up to four or five times lower than what is offered by private insurers. (US Insurance Online)

Today’s News: Anthem Blue Cross Seeks Rate Hike, Vehicle Monitoring Raises Privacy Concerns and AIG Units for Sale Again

Posted in AIG , Health Insurance , Life Insurance , Life Insurance Companies , Save on Health Insurance

July 16th, 2010
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Health insurance companies are seeking to once again raise rates, a vehicle monitoring system that could lower auto insurance rates raises concerns of privacy and AIG is looking to sell two more life insurance units to raise money.

Anthem Blue Cross Seeks Rate Hike

Earlier this year, Anthem Blue Cross proposed a 39 percent rate hike for its California customers, but after receiving a lot of criticism from everyone including President Barack Obama, the health insurance company temporarily suspended the increase. Now the company is proposing that the rates be increased again, but this time by 20 percent. It submitted filings on Wednesday to the state Department of Insurance and the Department of Managed Health Care and hopes to see the increase take effect for 600,000 Californians by Sept. 1 (San Francisco Chronicle).

Vehicle Monitoring Raises Privacy Concerns

Texas auto insurance company, MileMeter, has filed a lawsuit against Massachusetts-based Liberty Mutual Group Inc. for patent infringement with the use of a vehicle monitoring system that helps track cars for pay-as-you-drive (PAYD) services. MileMeter says that using a monitoring system infringes upon a customer’s right to privacy and could also result in an unfair increase in auto insurance rates. The company is the first in the United States to offer PAYD services without the use of such technology, but notes that it carries over 100 patents that include the technology it claims Liberty Mutual as taken (Market Watch).

AIG Units for Sale Again

Major life insurance provider AIG has placed two more of its units for sale in order to build income. Currently, it plans to sell two Asian life insurance units with the hopes that doing so will drum up about $5 billion for its remaining businesses. Also, the company, which is still trying to repay money it was granted to avoid bankruptcy, hopes that the money could help to reduce its deficit. So far, it has also sold its ALICO business to MetLife and hopes to retry its sale of AIA Group to Prudential PLC (Market Watch).

American International Group Inc. is putting two Asian life-insurance units back on the sales block, hoping to get roughly $5 billion for the businesses, The Wall Street Journal reported Thursday, citing unidentified people familiar with the matter.

Today’s News: Abortion Bill Vetoed in Oklahoma, Oil Spill Spurs Home Insurance Concerns and AIG Refuses Unit Buyout Offer

Posted in AIG , Health Insurance , Home Insurance , Life Insurance , Life Insurance Companies , Prudential

July 9th, 2010
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Oklahoma’s governor has vetoed a bill recently passed in the state that would restrict abortion options under health insurance. In other insurance news, some reports have found that the oil spill in the Gulf could have a negative effect on home insurance policies and major life insurance company, AIG, has refused a buyout offer from Prudential, PLC.

Abortion Bill Vetoed in Oklahoma

The abortion language in U.S. health care reform that was so controversial it caused Bart Stupak to retire seems to be causing a bit of controversy at the state level as well. Recently, Oklahoma Gov. Brad Henry vetoed an abortion bill that would place strict limits on when private health insurance companies could cover the procedure. The bill included exceptions for those who had been raped, the victim of incest or if the mother’s life could be placed in danger due to the pregnancy. But the governor believed that the exceptions were too-heavily restricted by time limits and would not truly benefit the victims. (Associated Press)

Oil Spill Spurs Home Insurance Concerns

Now that the waters from the Gulf of Mexico oil spill have made their way to coast lines — and hurricane season is rapidly approaching — some homeowners have expressed concerns that their homes may be the victims of oil-laden waters. However, insurance industry experts say that while they cannot stop the hurricanes from throwing water onto properties, they have the cash necessary to help the properties rebound. According to the National Oceanic and Atmospheric Administration, this hurricane season (June 1 to Nov. 30) could be very active, so homeowners should have home insurance in place to protect their finances during this time. (Hartford Courant)

AIG Refuses Unit Buyout Offer

American International Group (AIG) announced on Tuesday morning that it wouldn’t accept an offer from Prudential PLC — one that would allow the company to acquire part of AIG’s pan-Asian life insurance subsidiary — because it was too low. Instead of accepting the offer for $30.375 billion, the life insurer decided to work with the original deal made with Prudential for $35.5 billion. There is no word as to whether Prudential will honor the first offer once again, leaving some to wonder why AIG turned down the offer with bailout money left to pay back. (Blogging Stocks)

Today’s News: States Get $51 Million to Rate Health Insurance, Prop 17 Gets Shot Down and AIG Repayment Prospects Look Shaky

Posted in AIG , Auto Insurance , Health Insurance , Save on Auto Insurance

June 25th, 2010
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The U.S. Department of Health and Human Services has made grants available to states to help them enhance their health insurance rate review programs, California’s Proposition 17 auto insurance bill does not make the vote and AIG looks to be struggling to fulfill its promise to repay taxpayers.

$51 Million to Rate Health Insurance

Every state, as well as the District of Columbia, has been granted $1 million to work on a process that will help it review and give approval to health insurance premium requests. In total, there is $250 million to give out to states under the Patient Protection and Affordable Care Act, but the $51 million is the initial portion being used to get the programs started. The deadline for states to grab their share is July 7, while the second round of grants is expected to be distributed before the end of the year. (Insurance News Net)

Prop 17 Gets Shot Down

After months of debates on whether California drivers would benefit from Proposition 17, also known as the Continuous Coverage Auto Insurance Discount, the voters gave the ultimate answer: no. Prop 17 was best known for being advertised as a major benefit because it would provide auto insurance discounts to those who maintained their coverage continuously. However, opponents disliked the bill since drivers who were unable to maintain coverage would suffer a penalty. With 99.1 percent of the votes in, Prop 17 was losing by 158,000 votes. (San Francisco Chronicle)

AIG Repayment Plans Fading

After AIG’s attempt to sell its Asian life insurance unit went bust when it refused an original offer from Prudential PLC – an act that resulted in an even lower bid from the buyer – some wonder whether the insurer will be able to repay its debts to taxpayers. The $35 billion that AIG could have gained would have placed a significant dent in the $132.6 billion it borrowed. However, the company now has to try to sell the life insurance unit again to try to repay what is owed. (CNN Money)

AIG Posts $1.45 Billion Profit for First Quarter

Posted in AIG , Life Insurance , Life Insurance Companies

May 13th, 2010
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After raking in an impressive $1.45 billion quarterly profit, AIG says it is on its way to repaying the $182 billion government bailout it received in 2008 and 2009. The company already laid out a bailout repayment plan in April in hopes of showing how serious it is in paying back its debts to taxpayers. Now the life insurance company says that its recent profit could make its goal a greater reality.

First Quarter a Good One for AIG

AIG saw a first quarter income of $1.45 billion ($2.16 per share), which compares to a loss of $4.35 billion a year earlier, the company said on Friday. This is good news for the company but is not its first profit.

In fact, AIG has been able to post several profits since it received bailouts in 2008. This recent profit is the third in the past four quarters for the life insurance company.

The Company is on Track for Repayment

In addition to this quarterly profit, AIG has been selling its units in order to raise capital for repayment. In March, it agreed to sell American Life Insurance Company (ALICO) to Metlife for $15.5 billion. In the same month, the company sold its Asian life insurance to Britain’s Prudential PLC for $35.5 billion.

The company believes the sell-offs and profits show that it is stabilizing and essentially on the right track. However, it is still cautious about generating new business in various sectors, including its Chartis insurance unit, due to challenging economic conditions.

Since much of the life insurance company’s profit is coming from investments, some wonder how it will grow profit through internal business. Some say that investors are looking to see this growth or they may not continue to stay on board.

AIG CEO Says Company on Strong Bailout Repayment Path

Posted in AIG , Life Insurance

April 13th, 2010
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Robert Benmosche, CEO of American International Group Inc. (AIG) recently announced that the company would become less reliant on U.S. aid as it sell its units, borrows from debt markets and works hard to strengthen operations it intends to hold on to. On a strong path to repaying the $182.3 billion it received in rescue funds, Benmosche said that AIG will hold up its end of the bargain sooner than later.

Path to Repayment

The insurer’s plan is to first pay off the $25.3 billion it owes to the Federal Reserve. Then it will decide how to raise cash it needs to end its separate arrangement with the U.S. Treasury that includes a draw on a second credit line of more than $40 billion.

It has already made moves to raise capital but selling $50 billion worth of its life insurance business. It sold off American Life Insurance Company (ALICO) to MetLife and its Asian life insurance business to Prudential. These moves, according to Standard & Poor’s, have shown that the insurer may recover from the junk status assigned to its stand-alone credit at year-end.

Consumers Still Believe in AIG

Despite the ups and downs the AIG has seen since it faced bankruptcy in 2008, Benmosche says that about 75 percent of life insurance buyers are still interested in keeping their insurance with the company, as opposed to 41 percent six months earlier. This spells good news for the company.

The company hopes that with completing the sales of its life insurance units, it will continue to increase profits and, in turn, improve operations as a whole.

Now that AIG is recovering, do you feel comfortable with purchasing life insurance from the company?

AIG Reaches Deal with MetLife for Life Insurance Company

Posted in AIG , Life Insurance , Met Life

March 9th, 2010
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After working with MetLife in an effort to sell its American Life Insurance Company (ALICO), the two companies were finally able to strike a deal. For $15.5 billion, AIG will be selling its second-largest foreign life insurance business and in turn, own roughly one-fifth of MetLife.

The Specifics of the Agreement

According to both companies, AIG agreed to sell ALICO for $6.8 billion in cash and $8.7 billion in MetLife equity, which includes common stock and convertible preferred securities. Under this deal, the company would take a stake of about 20 percentin MetLife, which would result in 78.2 million common shares and 6.6 million shares of convertible preferred stock.

The shares that AIG holds would come with voting restrictions, however. The company would not be able to influence MetLife’s operations and business decisions. But it would be exposed to MetLife’s fortunes for up to two-and-a-half years.

AIG Still Trying to Repay Its Debt

Over the past year, AIG has been working hard to repay U.S. taxpayers for the debt incurred after having the government bail it out twice for a total of nearly $200 billion. Ever since receiving the help, which resulted in the company being nearly 80 percent owned by the government, it has made every effort to reduce its debt.

Recently, it sold its Asia unit to Prudential for $35 billion and it has plans to repay its debt via cash generated by its insurance business and asset sales.

Of course, President Barack Obama is placing some life insurance companies on the hook for a tax that will ensure repayment. With this tax, it is estimated that AIG will be required to pay back $388.8 million. With all of the mistakes that the company has made over the last year, it looks probable that the company is indeed picking up the pieces and moving forward in the right way that will not affect customer life insurance rates.

AIG Sells Prudential Its Asia Unit for $35 Billion

Posted in AIG

March 2nd, 2010
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On Monday, American International Group (AIG) announced that it had reached an agreement to sell its Asian life insurance business to Britain’s Prudential PLC. The deal between the two companies is valued at $35.5 billion and is the second deal the insurer has worked out to sell off some of its business, which would in turnpay back taxpayers for its 2008 and 2009 bailouts.

The Deal with Prudential

In its effort to restructure its business and pay back taxpayers, AIG struck the deal to sell its Asianlife insurance business to Prudential. The deal, according to published reports,includes $25 billion in cash.Theinsurer says that this is the largest cash proceeds it has received from any sale during its current restructuring efforts. The money, says Chief Executive Bob Benmosche, will give the company “greater flexibility” as it tries to restructure.

Of the $25 billion in cash, $16 billion will go to the government to buy back preferred shares that were given to it during the bailout. The remaining $9 billion will be used to pay down more than $25 billion outstanding owed to the New York Fed.

Getting Business in Order

AIG has been in the news lately for its attempts to pay taxpayers back after its bailout. Most recently, it has been noted for its decision to sell one of its international insurance units to MetLife for$15 billion. Also, it has recently announced its decision to stop using cash flows from its own life insurance businesses to repay taxpayers, which is something that has probably prompted it to sell these businesses instead.

Since its first bailout in 2008, AIG has been on the fast track to repay its debts. In addition to the tax that Obama plans to impose on insurance companies and banks to repay their debts, we may see announcements from other companies that plan to do the same.

AIG Scraps Use of Life Insurance Policies to Pay Taxpayers Back

Posted in AIG , Life Insurance

March 1st, 2010
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American International Group Inc. (AIG) has recently reported that it has decided to ditch its plan to use cash flows from life insurance policies to repay its $8.5 billion debt to the Federal Reserve Bank of New York. Instead, it plans to repay the money through other means, including cash generated by its insurance business and asset sales.

Why the Change?

Originally, the plan was to create $8.5 billion in securities back by cash flows from the policies to be underwritten by some of the company’s U.S. life insurance units. However, people who are close to the decision makers for AIG say that the company decided to move away from the original payback plan because it saw that its fourth-quarter results were better than expected.

Its market has recovered well over the past year and has given the company a greater chance of repaying its debts to U.S. taxpayers by other means.

The Pressure to Repay

Oddly, AIG has been in the news more in the past few weeks than it was in the year following its major fall. Part of the reason AIG disappeared for a while was because it was trying to spark a recovery plan out of the public’s critical eye.

By the time it reappeared, we were hearing news that it was selling to Metlife some of its life insurance business. Since the company is now 80 percent owned by taxpayers, it is definitely feeling the pressure to repay chunks of government money to U.S. taxpayers and looks to be pushing to get it done in the very near future.