AIG is not like other Insurance Companies. It is bigger, for one thing. A lot bigger.
AIG's investments are also huge. They are diversified. Let us hope that they are really, really diversified. AIG is the only Insurance Company to report huge write-downs due to what its CEO, Mr. Martin Sullivan, attributed to "residential mortgage and credit market conditions", in other words, the bottom that fell out of the subprime mortgage market, the overall real estate market, and the resulting huge decline in credit availability to homeowners. See Peter S. Goodman, "Markets And Dollar Sink As U.S. Slowdown Grows/Homeowners Feel the Pinch of Lost Equity" (New York Times Nat'l Ed., p. A1, col. 5, Thursday, November 8, 2007).
AIG is the only Insurance Company reported to write down anything like the nearly $2,000,000,000.00 that AIG wrote down in its 3rd Quarter. See Joseph B. Treaster, "A.I.G. Takes a $1.95 Billion Hit on Its Housing Investments" (New York Times Nat'l Ed., Business Day Section, p.C4, col. 1, Thursday, November 8, 2007).
Is it the only Insurance Company, or is it just the first?
In its 3Q, AIG reported a loss of roughly 1 in 1,000 or 1/10 of one percent: $864,000,000.00 in a reported investment portfolio totaling $872,300,000,000.00. Let's keep an eye out for future earnings reports for sure, even from sectors that may seem unlikely to be adversely affected by current market conditions.
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