mcliu Posted March 5, 2013 Share Posted March 5, 2013 I've just started to look into the company. A couple of newbie questions that I would appreciate if someone could help me out with.. 1) How do you get comfortable investing in this company? How do you know it's reserving enough to cover losses, or getting a big enough of a premium? Underwriting track record doesn't seem exceptional, how do you trust that the management team is doing the right thing in terms of pricing/reserving? 2) How do you value this business? I see book value getting tosses around quite a bit and a 10% ROE. How do you get comfortable that the company's truly achieving this economic ROE without under reserving? Is it a matter of faith in the management team? Link to comment Share on other sites More sharing options...
racemize Posted March 5, 2013 Share Posted March 5, 2013 I've just started to look into the company. A couple of newbie questions that I would appreciate if someone could help me out with.. 1) How do you get comfortable investing in this company? How do you know it's reserving enough to cover losses, or getting a big enough of a premium? Underwriting track record doesn't seem exceptional, how do you trust that the management team is doing the right thing in terms of pricing/reserving? 2) How do you value this business? I see book value getting tosses around quite a bit and a 10% ROE. How do you get comfortable that the company's truly achieving this economic ROE without under reserving? Is it a matter of faith in the management team? certainly there is some faith involved, but the reserve triangle modification to get you AY loss developments has helped me on the reserving front. I posted that in 2011 and recently for 2012. Link to comment Share on other sites More sharing options...
matts Posted March 6, 2013 Share Posted March 6, 2013 AIG launches new unit to invest in home loans. http://www.crainsnewyork.com/article/20130306/REAL_ESTATE/130309917 Sounds like a great idea. Matts Link to comment Share on other sites More sharing options...
racemize Posted March 8, 2013 Share Posted March 8, 2013 Hank Greenberg on why AIG went down: http://www.fool.com/investing/general/2013/03/08/exclusive-interview-with-former-aig-ceo-hank-green.aspx Now, I was going to step down as the CEO in May. This was in March of 2005. I was going to step down as CEO, stay as chairman to make sure the transition to a new leadership team would go smoothly, but I stepped down from the whole thing. Spitzer forced me out as CEO and I decided not to stay as chairman. What happened after that? The new CEO abandoned all of the risk management controls that we had -- literally abandoned them -- and discontinued the staff meetings that we had on a Monday morning, that brought everyone, the key people, together. We knew exactly what was happening on a daily basis. They lost control. If you read the book, which you did, there is a statement from the auditors who went to the then-Acting Chairman Bob Willumstad, and said, "The current management can't run the company." They did nothing about it. Link to comment Share on other sites More sharing options...
blainehodder Posted March 8, 2013 Share Posted March 8, 2013 Another Newbie question from someone who doesn't know much about AIG other than looking at the poor past underwriting record, and the assumed scale advantages... ...but If AIG was really a super bargain, wouldn't Buffett scoop up the shares? Wouldn't that be his dream? Massive capital deployment in a business he is an expert on, at bargain prices? It seems scary that he isn't buying. Go easy on my reasoning. Link to comment Share on other sites More sharing options...
hyten1 Posted March 8, 2013 Share Posted March 8, 2013 i could be wrong but i think for an insurance company, buffett would want to own the entire thing? now can brk buy the entire aig (there are many reason why they can't) hy Link to comment Share on other sites More sharing options...
blainehodder Posted March 8, 2013 Share Posted March 8, 2013 i could be wrong but i think for an insurance company, buffett would want to own the entire thing? now can brk buy the entire aig (there are many reason why they can't) hy That was my initial thought as well, but he has held non control positions in insurance before. GEICO is the obvious example of a company where he didnt control the float, but was massively concentrated. Link to comment Share on other sites More sharing options...
alpha231616967560 Posted March 8, 2013 Share Posted March 8, 2013 If you read Buffett's writings about the insurance business in annual letters and so forth, you'll notice that he talks a lot about how 90% of the industry writes business that they don't charge enough for. They just can't resist it. Aig has fit that mold in the past. Doesn't mean that they will again or that they aren't so cheap that the MOS defies a high combined ratio, but in general it isn't the sort of business that Berkshire invest in through purchasing equities. Just my $.02 Link to comment Share on other sites More sharing options...
gfp Posted March 8, 2013 Share Posted March 8, 2013 Berkshire invested in White Mountains for years before selling. They currently hold large positions in both Munich Re and Swiss Re common. AIG has a poison pill in place to keep any investor from acquiring more than 5% of their common equity (to protect the NOL asset). He may not be enamored with the company (despite Ajit saying a lot of nice thinks about Peter Hancock), or he may not be interested in taking a small (for BRK) position in it. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 8, 2013 Author Share Posted March 8, 2013 (despite Ajit saying a lot of nice thinks about Peter Hancock) Anything else besides this? "Peter is an astute evaluator of risk…and he figures things out very quickly," said Ajit Jain, who heads Berkshire Hathaway Inc.'s reinsurance business and has known Mr. Hancock socially and professionally for a decade. "He will recognize faster those things the insurance industry does poorly and be in a better position to find untapped potential." http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/bruce-berkowitz-has-26-of-the-fairholme-fund-in-aig-dont-you-think-you-shoul/msg68189/#msg68189 Link to comment Share on other sites More sharing options...
jay21 Posted March 9, 2013 Share Posted March 9, 2013 It could be a circle of competence issue as well. I think he passed on Assurant when it was offered to him because it was too complicated. Link to comment Share on other sites More sharing options...
Liberty Posted March 12, 2013 Share Posted March 12, 2013 http://www.reuters.com/article/2013/03/11/us-aig-greenberg-lawsuit-idUSBRE92A13D20130311 AIG shareholders win class-action status in lawsuit versus U.S. Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 12, 2013 Share Posted March 12, 2013 http://www.bloomberg.com/news/2013-03-12/aig-impairments-top-600-million-as-elderly-outlast-lifespan-bet.html AIG Impairments Top $600 Million as Elderly Outlast Lifespan Bet Link to comment Share on other sites More sharing options...
mrvlad0 Posted March 13, 2013 Share Posted March 13, 2013 AIG Shareholders Gain Class Action Status in Greenberg’s Bailout Suit http://bit.ly/12OVMj5 Link to comment Share on other sites More sharing options...
cogitator99 Posted March 15, 2013 Share Posted March 15, 2013 It could be a circle of competence issue as well. I think he passed on Assurant when it was offered to him because it was too complicated. Well, if this is beyond Warren's circle of competence, what the hell are we doing even trying to figure this out? Haha Link to comment Share on other sites More sharing options...
Liberty Posted March 20, 2013 Share Posted March 20, 2013 http://www.valuewalk.com/2013/03/aig-ceo-benmosche-on-his-cancer-and-greenbergs-lawsuit-preview/ AIG CEO, Benmosche on His Cancer and Greenberg’s Lawsuit Link to comment Share on other sites More sharing options...
mrvlad0 Posted March 20, 2013 Share Posted March 20, 2013 (FoxBusiness) Benmosche interview: Part 1 $AIG http://bit.ly/WGk3UD Part 2 $AIG http://bit.ly/ZSCPV9 Part 3 $AIG http://bit.ly/XYrzdn Link to comment Share on other sites More sharing options...
dcollon Posted March 20, 2013 Share Posted March 20, 2013 mrvlad0, Thanks for posting the clips. Link to comment Share on other sites More sharing options...
boilermaker75 Posted March 22, 2013 Share Posted March 22, 2013 "Baupost Group took a new stake in American International General (NYSE: AIG), now making up the sixth-largest position in Baupost's portfolio." from, http://beta.fool.com/mhargra/2013/03/22/-86/27724/?source=eogyholnk0000001 Link to comment Share on other sites More sharing options...
mrvlad0 Posted March 27, 2013 Share Posted March 27, 2013 Benmosche on CNBC $AIG http://bit.ly/13wSe5i (03/27) Link to comment Share on other sites More sharing options...
muscleman Posted March 27, 2013 Share Posted March 27, 2013 Benmosche on CNBC $AIG http://bit.ly/13wSe5i (03/27) Around 7:21, he mentioned something about compensation and said if it is not resolved, he and 5 of his top executives will resign in April. Does anyone know what this is all about? Is he talking about something in the past that has been fixed, or do we have an incoming management earthquake soon? ::) Link to comment Share on other sites More sharing options...
hyten1 Posted March 27, 2013 Share Posted March 27, 2013 its in the past Link to comment Share on other sites More sharing options...
mrvlad0 Posted March 27, 2013 Share Posted March 27, 2013 AIG Sets Bonus Plan to Reward Executives After Repaying Bailout http://buswk.co/XHV6V2 AIG also established a policy to claw back incentive pay from executives who harm the company’s finances or reputation, according to the filing. Link to comment Share on other sites More sharing options...
mrvlad0 Posted March 29, 2013 Share Posted March 29, 2013 The Tarp Warrants 'Secret' http://bit.ly/10hpBRV Link to comment Share on other sites More sharing options...
zippy1 Posted March 30, 2013 Share Posted March 30, 2013 U.S. News N.Y. Fed Employee Reverses Testimony on AIG Losses http://live.wsj.com/video/barrons-buzz-michael-dell-offer-is-too-cheap/DF3AFCD1-B15F-49F6-927A-1016DB06E0BB.html?mod=BOL_article_full_video#!18597512-C53C-4C71-BFD0-1515A156F720 So my second biggest holding is suing my biggest holding.... Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now