Following an initial “no comment,” unofficially we are hearing that AIG is reviewing an analyst's challenges to its reserve adequacy before responding. That's reasonable, but the company can't afford to leave buyers hanging too long before putting these concerns to rest in this crucial renewal season.

The last thing American International Group needs is any hint that reserves for its property and casualty insurance carriers might be inadequate.

Yet Todd Bault, an analyst with Sanford C. Bernstein, issued a report to his firm's clients suggesting that AIG has a whopping $11 billion reserve deficiency, mostly impacting a trio of long-tail lines–workers' compensation, general liability and professional liability. (See http://bit.ly/7WaCIH.)

I'm sure risk managers and brokers doing business with AIG's commercial insurance carriers—now flying under the Chartis brand—would sleep a lot better if reassured by the company's highest officials that somehow Mr. Bault is mistaken in his conclusions, and that all is fine and dandy.

Last year at this time, buyers needed a lot of hand-holding before they were comfortable placing or keeping their business with AIG carriers after credit default swaps nearly destroyed the parent company. This year, all seemed to be forgiven—at least until this latest news.

AIG's new top dog, Chief Executive Officer Robert Benmosche, may yet step up and refute this damning report, or at least place its conclusions in a less problematic context for skittish buyers.

But even if further explanation is forthcoming from AIG, this renewal season has become very intriguing. That's because this wasn't the first bone-crunching pothole AIG hit recently on its road to recovery.

There remain questions about AIG's leadership after reports that Mr. Benmosche, unhappy about meddling by Uncle Sam with his executives' pay, might take a hike. While he later reassured employees he is committed to the company, you've got to wonder about his staying power, especially after a harsh story in the Nov. 22 edition of “New York” magazine. (See http://nymag.com/news/business/62259/.)

The piece reported on how Kenneth Feinberg, special master for TARP executive compensation at the U.S. Treasury, tore into Mr. Benmosche and the AIG board when summoned to defend his limits on executive pay. He was quoted as declaring: “You guys just don't get it.”

Mr. Feinberg reportedly lectured the board about how AIG wouldn't be here without a taxpayer bailout, and that huge salaries for those at firms supported by public funds would simply not survive popular outrage.

This is a lot of drama for a company that had been settling back into more of a routine, business-as-usual mode–at least among its p&c carriers.

What happens next?

Stay tuned!

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