AIG Stands Its Ground

Today I moderated a webinar about the fallout from the American International Group debacle featuring three major insurers–one of which was AIG!–put on by the Risk and Insurance Management Society. With AIG in the spotlight and the sharks smelling blood in the water, the pressure was on the AIG rep to reassure nervous buyers that the carrier is sound, safe and secure despite the hub-bub over the $85 billion federal bailout of its corporate parent.

For the first 20 minutes or so, the webinar was little more than an infomercial for the three participating carriers, with FM Global and Zurich joining AIG to discuss “Risk Management Strategies In An Unsettled Financial Market.”

I don't blame the trio for delivering a sales pitch for their respective carriers, given that the marching orders from RIMS was to discuss what assurances they could give policyholders regarding the stability of their companies, as well as lay out why risk managers should be comfortable placing or renewing coverage with them.

These were Larry King-worthy softballs which all three easily hit out of the park.

But the Q&A was totally unscripted and quite lively, I thought–and not just because batting practice was over, and I was the one pitching high, hard ones at panelists.

John Doyle–who, among his many titles, serves as president and CEO of AIG Commercial Insurance–stood his ground despite being peppered with questions from the more than 500 attendees who signed up for the live event, with the queries filtered and supplemented by yours truly.

While admitting his carrier was in a state of flux given the uncertain future of his parent firm, he reiterated that state-imposed firewalls meant AIG's insurers have all their surplus intact, and that their assets are protected against being drained by AIG corporate.

He was also combative rather than defensive, suggesting that, as our own Phil Gusman reported it, recent changes in some competing companies positions regarding writing excess policies over AIG primary policies, or co-surety policies with AIG, are not based on market realities. (Click here for that story.)

He charged that competitors are trying to take advantage of the uncertainty surrounding the AIG liquidity crisis.

Of course, that's no surprise. This softening market was competitive to begin with. And now that a giant like AIG has question marks in the public's mind, it's natural everyone would try to capitalize on their perceived vulnerabilities–real and imagined.

But with every CFO likely to ask their risk manager what's up with AIG, the big question is whether buyers and their brokers will in fact move their business out of fear or simple prudence, or choose to stay put.

I doubt there will be a run on the bank, so to speak, but I do think every piece of business written by AIG will be subjected to far more scrutiny than usual. How could any self-respecting risk manager do otherwise?

Reputational risk is a very real exposure, as every risk manager knows, and now AIG is experiencing the impact first hand.

If you'd like to hear more details, click here for NU's coverage. Or, better yet, listen to the discussion yourself by clicking here.