Analyst claims near $12bn hole in investments to pay claims
Investment research firm Sanford C. Bernstein has said AIG’s property and casualty insurer, Chartis, has an $11.9bn reserves shortfall and could not meet potential claims, the New York Times reports.
The report’s author, Todd Bault, said the inadequacy had grown in recent years — “nearly the opposite behaviour that we would expect,” since the claims-paying reserves of other insurance companies had been growing.
Most of the shortfall was in lines where claims developed slowly, such as workers’ compensation and professional liability
Regulator concern.
AIG and the Pennsylvania Insurance Department, which regulates AIG.’s biggest property and casualty business, declined to discuss the Bernstein report.
The New York State Insurance Department said analysts there were “taking this seriously,” but had not finished reviewing the research report.
The stock fell by almost 15%, to $28.40 from $33.30. Bernstein cut AIG’s price target by 40%, to $12 from $20.
