AIG (AIG), MetLife (MET) and Prudential Financial (PRU) are among nine global insurers that have...

AIG (AIG), MetLife (MET) and Prudential Financial (PRU) are among nine global insurers that have been categorized as "systemically important" by the G20's Financial Stability Board. The designation, which U.S. authorities also want to place on the firms, will mean they'll have to hold higher capital reserves, and formulate recovery and resolution plans to limit any fallout should they collapse. Unlike in the U.S., GE Capital's (GE) not on the list, although Prudential PLC (PRU), Aviva (AV), Germany's Allianz (ALIZF.PK), France's Axa (AXAHY.PK), China's Ping An (PIAIF.PK) and Italy's Assicurazioni Generali (ARZGF.PK) are.

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Comments (4)
  • Richard Cockbain
    , contributor
    Comment (1) | Send Message
    There are already stringent capital requirements for insurers (Solvency II will be introduced into Europe), do we really need to hamper these organisations with a higher capital level than their competitors?


    Surely it is more important for the regulator to understand the nature of the business and monitor Board deciisons rather than simply holding back capital in reserve?


    Had the regulators understood AIG's business then the company may not have faltered. No amount of capital would have been sufficient to stop the 2008 crisis.
    19 Jul 2013, 04:07 AM Reply Like
    , contributor
    Comments (55) | Send Message
    That's a good point.


    How much higher capital reserves does AIG need to hold and if they hold this amount, would it have prevented the 2008 crisis anyways?


    AIG lost a ton of money in 2008 because they insured products that were much riskier that they seemed. This is because these CDO's were fraudulently rated AAA. If they were rated properly, would AIG have insured so much of them? Wasn't this the case? If so, it would seem that part of the root problem were the fraudulent ratings agencies, which none have been criminally charged.


    According to PBS Frontline's document "The Untouchables" (Too Big To Jail), there were numerous cases of fraud, but no Wall Street executive has been criminally charged. The victim of a lot of this fraud was AIG. Maybe somebody can weigh in if this is not necessarily correct.
    19 Jul 2013, 08:43 AM Reply Like
  • oilsands
    , contributor
    Comments (599) | Send Message
    I can not accept AIG as a victim. Yes the suppliers of the CDOs were negligent to the point of fraud, but anyone with a lick of sense should have realized the whole concept was preposterous and inherently unsafe. For execs being paid hundreds of millions of dollars to let this happen certainly does qualify them for prosecution. In China they would have been hanged. Quickly.
    I still can not believe that AIG was allowed to give out bonuses with our tax money. Citing contract provisions is totally inappropriate when the firm is using tax dollars. Outrageous.


    As to today, our regulators are so hamstrung that even mentioning them is pointless. A strong new Glass Steagal law might give regulators something to work with, although I haven't seen what is being included in the proposed law.
    19 Jul 2013, 10:34 AM Reply Like
    , contributor
    Comments (55) | Send Message
    Good points. Thanks.
    19 Jul 2013, 03:07 PM Reply Like
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