Editorial: Hitting Bottom?

It may be too early to be heaving any sighs of relief, but as AA&B goes to press, global stock markets are beginning to stabilize in the wake of a multitude of government bailout promises to their respective financial services industries.

The United States led by passing its $700 billion plan, and other governments quickly followed; even stolid Switzerland swallowed its pride and agreed to prop up troubled UBS. These bailouts all underline the sobering fact that, like it or not, ours is a truly global economy, where if one country gets kicked, countries around the world will say ouch. The irony is rich amid this bailout mania, including its desperate promotion by an administration opposed to big government interference in business, and the fact that both presidential candidates initially opposed the bailout, then voted for it. The other irony is that unlike other financial services, so far insurance has escaped the government bailout trend–with, of course, one notable exception.
AIG continues to dominate the news, with the feds and regulators casting an increasingly jaundiced eye on executive pay and perks. The last straw was several post-bailout junkets, including an $86,000 pheasant hunting spree for AIG executives and a $440,000 event for its top-performing agents and brokers at a posh California resort (I didn't get to cover that one–were you there?). The actions were so egregious that New York Attorney General Andrew Cuomo demanded a stop to the events and has requested AIG to remand executive bonuses. Good sense, if you ask us.
However, in spite of the bad press, all other indications are that AIG's core businesses are stable. A recent Advisen survey shows that more than three-quarters of brokers are confident about the stability of AIG's property-casualty business. In a show of strength, AIG representatives were out in force at the Target Markets Program Administrators Assn. annual summit meeting in Arizona last month, and brokers I spoke with said that the insurer had been very proactive in reaching out to its distributors to explain what was going on and keep them apprised of updates. More good sense, if you ask us.
In yet more irony, this month's AA&B spotlights financial institutions, and our lead story by Gallagher's Dr. Philip J. Norton examines the state of the industry and specifically what's going on with D&O. On the programs side, we take a look at what one major program administrator recommends for retail agents and brokers who want to get involved in this important niche business.
Meanwhile, the AA&B print edition has undergone an extensive graphics redesign and editorial enhancement, beginning with our September issue. Do you like it? Hate it? Have suggestions for ways to make it better? Please visit agentandbroker.com and click on "Take the Survey" to share your opinion.
Laura M. Toops,
Editor