Monthly Archives: April 2009

Book Review: Trend Following (5)

There are many places where I agree with Michael Covel.  Here are two: Trend following, or, price momentum, is a good strategy. Most investment advisors charge a lot, and on average deliver suboptimal performance. The weak form of the efficient markets hypothesis doesn’t work. Most of the Wall Street establishment, and those trained by universities […]

To What Degree Were AIG’s Operating Insurance Subsidiaries Sound? (8)

Continuing profitability / Is this strictly an investment problem? 2007 Net Income 2008 Net Income 2007 Net Operating  Income 2008 Net Operating  Income Surplus Increase net of Capital Contributions and divs Yellow Column less Realized Capital Gains Total P&C 5,563 733 7,210 654 (353) Total Life 3,404 (23,218) 7,206 2,819 (29,539) (1,840) Total 8,967 (22,485) […]

To What Degree Were AIG’s Operating Insurance Subsidiaries Sound? (6)

Realized Capital Losses, Excluding Securities Lending at the Life Companies Subsidiary Sum of 2007YE Surplus Other Realized Capital Losses / Surplus First SunAmerica LIC 501 -81% The Variable Annuity LIC 2,838 -61% AIG Annuity IC 3,729 -49% Am Int LIC of NY 553 -41% AIG LIC 440 -39% American General L&A IC 471 -28% SunAmerica […]

To What Degree Were AIG’s Operating Insurance Subsidiaries Sound? (4)

Unrealized Capital Losses Subsidiary C UR CG / Surplus 2008YE Surplus Pacific Union Assurance Co -385% 20 AGC LIC -360% 5887 American Life IC “Alico” -118% 3900 American General LIC -89% 5185 SunAmerica LIC -74% 4653 AIG Casualty Co -46% 1457 AIG Annuity IC -29% 3045 American Home Assurance Co -21% 5702 The Variable Annuity […]

Fed Statements Compared

March Statement April Statement My Comments Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. They are […]

To What Degree Were AIG’s Operating Insurance Subsidiaries Sound? (3)

Capital Stacking, Cross-guarantees, and Surplus Notes After the difficulties with securities lending, the next issue reminded me a lot of the first company I worked for: Southmark.  A two-time loser in chapter 11, in their second trip of insolvency, they interlaced the capital of their subsidiaries, forcing them to do business on a thin capital […]

To What Degree Were AIG’s Operating Insurance Subsidiaries Sound? (2)

The Securities Lending Fiasco Most, if not all life insurance companies engage in securities lending to some degree.  AIG did it in a big way, involving almost all of their life subsidiaries.  When a life insurer lends out its bonds, they receive back safe liquid collateral equal to 100-102% of the par value of what […]