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Rubicon Associates is headed by a Chartered Financial Analyst with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in both public and... More
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  • AIG - Looking To Buy What They Insure. 0 comments
    Apr 2, 2012 9:30 AM | about stocks: AIG
    Via Reuters (from an interview with the FT):
    (Reuters) - Bailed-out insurer American International Group (AIG.N) is looking at the possibility of purchasing whole loans as another investment vehicle, leveraging the growing market share of its mortgage insurance business, the company's chief executive said in an interview with the Financial Times. "We're now thinking about maybe we should try to find a way to buy the mortgages that we're insuring," Bob Benmosche told the paper. AIG's mortgage insurance unit, United Guaranty or UGC, has recently become the largest in its industry, as competitors have faltered amid the pressure of bad bubble-era loans. With investment returns at a relative pittance, insurers like AIG have been looking for safe alternatives to boost income. There have been rumours in the market for more than a year about insurers buying whole loans as a way to diversify their portfolios and increase exposure to the housing market (without buying mortgage-backed securities). Benmosche told the paper any such program, if it happens, would not start until the fourth quarter.
    This is an interesting approach, owning the mortgages you insure. Creates an interesting risk propostion - you could then get involved with the mortgage directly before the insurance operation has to make good on the policy. I am trying to determine is this is a reserve play or a straight investment play.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: AIG
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