Posts
http://www.businessweek.com/news/2010-05-08/aig-making-real-money-after-1-45-billion-profit-ceo-says.html
This article talks about some of the adjustments AIG has made in order to become profitable once again. I am however still skeptical about a positive report of company such as AIG because of their recent greedy past. Based on this article, do you think this is a legitimate turn around for AIG or is it another smokescreen intended to fool investors?
Subscribe to:
Post Comments (Atom)
This is good news as a major financial player getting back on its feet and getting closer to paying back tax payers is a very good thing, however, before they get too strong I think making sure no insurer gets "too big to fail" is just as important as insuring no bank gets too big to fail. I haven't heard whether or not the proposed financial reform legislation will adrress these insurance firms but I think we need to think about that in this time as well.
ReplyDeleteIt sounds like AIG is making real, stable investments, unlike the housing bets it had made that lead to AIG's bailout out in 2008. CEO Robert Benmosche seems to grasp what the company needs to become profitable and remain profitable in the future. While it is easy to create fiction on balance sheets and overstate profits, I believe that AIG is taking steps in the right direction toward being a worldwide insurance agency for years to come.
ReplyDeleteIt is a good sign to see some progress but I don't think its a complete turnaround. They still need to "ensure that they earn the confidence of the marketplace" as was nicely put in the article. Customers and investors are still wary about AIG and it will take quite some time, a better rating(once they straighten out the rating system) consistent quarterly success, and smart investments before they can win back the public.
ReplyDeleteIt is nice to see that they are making more "real" money but once they continue to do this how long will it last before it delves into more riskier investments? These companies have deviated from sound investments before what will stop them from doing it again? Hopefully as Tommy pointed out that the financial reform will address the insurance companies as well. Then we do not have to worry about them deviating from sound investments into ones that will eventually lead to another crisis.
ReplyDeleteIts nice to see that AIG has made the most of their second chance, and as Tommy said it promising to see a financial giant recover. It will be interesting to see what, if anything, the government does to ensure that they don't get caught up in the same mess they encountered with the crisis.
ReplyDeleteI agree with others that this is a good sign, but I think we also need to put it in perspective. How much money did we give AIG through bailouts and guarantees? I think we need to compare that number (in the hundreds of billions) with their current profits before celebrating too much.
ReplyDelete