Advisen: Brokers Weigh in on AIG's Health

More than three-quarters of insurance brokers are “very confident” or “somewhat confident” in the financial security of the American Insurance Group (AIG) insurance companies, and few are recommending clients switch from AIG, according to a survey by Advisen Ltd.

On the heels of a similar survey of risk managers, Advisen sought to measure brokers’“wary” was how the vast majority of brokers characterized the attitude of their clients towards the unfolding situation at AIG.

A common theme in written comments is concern about adverse future developments. Although AIG executive management has repeatedly emphasized that core insurance assets will not be sold to repay the $85 billion loan, 47% of respondents said it will be necessary to sell at least some commercial property & casualty insurance businesses. Smaller brokers are far more likely to conclude that the AIG will sell core property & casualty businesses than are respondents from the four largest brokerage firms. A potential change in ownership of AIG’s insurance subsidiaries was a significant issue for many survey participants, including one brokerage firm executive who said, "AIG's book of multinationals needs all the P&C companies to stay in place worldwide." Another big concern expressed by both brokers and insurance buyers is that AIG will lose key management and underwriting personnel.

“Survey results show that brokers have communicated to policyholders that AIG’s insurance subsidiaries are secure,” said David Bradford, executive vice president and chief knowledge officer of Advisen. “However, while brokers have been a force for calm in the marketplace, survey responses indicate that brokers don’t yet know how much diversification clients will seek, or whether this crisis will impact overall market pricing or brokerage income.”

This Special Report is based an exclusive survey conducted by Advisen from September 26^th-30^th with 611 respondents Almost 65 percent of respondents described themselves as “executive management.” Eleven percent classified themselves as “producer,” and a similar number as “marketer/broker.” Almost 20 percent of participants worked for one of the four largest brokers.

“In conversations with brokerage firm executives attending this week’s CIAB Insurance Leadership Forum the story lines are the same as when we surveyed brokers a week ago,” said Thomas Ruggieri, CEO of Advisen from the conference in Las Vegas. “Execution risk of the asset sales has been cited as a common concern among brokers. They also worry about potential of breaking up the commercial P&C units. While brokers are watching ratings actions carefully, they are comfortable with the present security of AIG’s property & casualty subsidiaries.”

The eleven-page Advisen Special Report on the Broker survey results is available here: https://www.advisen.com/downloads/BrokersSpeakOutonAIG.pdf.