AIG, Chartis Facing Questions about Recent Loss
Thursday, February 24th, 2011
Ameriacn International Group Inc., now eager to show investors that it has nearly made a full recovery since the onset of the economic downturn, will potentially face questions regarding its property-casualty business after it has again posted a loss for the past year.
This sector named Chartis had previously indicated to investors that they would be facing a $4.2 billion change in its final quarter. However, notwithstanding that expense, the unit would have already incurred a loss that year. The company has stated that global economic conditions among other financial factors will prove for a difficult year in 2011 as well.
Chartis specializes in coverage for a variety of specific areas such as satellites and airplanes to manufacturing facilities around the world, according to the Wall Street Journal. Chartis represents a core facet of the scaled-back AIG that is devoted to working with the US in order to sell roughly a 2 percent stake possessed by the U.S. Treasury Department over the course of the next two years.
Chartis is anticipated to provide approximately 50 percent of the stake with the other 50 percent provided primarily by SunAmerica Financial Group, which is in charge of domestic life insurance among other things.
The projected value of the policies Chartis sold in 2010 were off by roughly 8 percent, up by 8 percent from 2009. The rationale afforded for this decline was that Chartis recently attempted to scale back sale on workers’ compensation coverage and catastrophe protections, according to the same Wall Street Journal article. Thus, the company was forced to pay more to brokers who match Chartis with their buyers. The costs associated with this transition have adversely affected this sectors profitability.
The silver lining to the news about Chartis is that its overseas operations are on the rise. They have risen by 17 percent in 2010. However, this is largely attributable to a major acquisition and the ability to take advantage of foreign exchange rates in the process.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: aig , chartis , loss
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