Reply #7: AIG may face some pricing pressure [View All]

[UpInArms]

http://www.businessweek.com/ap/financialnews/D89674L80.htm?campaign_id=apn_home_down

MAR. 31 4:57 P.M. ET American International Group Inc. has justified its higher rates as the price customers pay for dealing with a company that has the best credit and financial strength ratings in the industry.

Fast forward to the present and AIG is in a far different position. In the wake of New York Attorney General Eliot Spitzer's storm on the insurance industry and the company's own management upheaval, rating agencies have taken a knife to AIG's ratings.

And that could provide fodder for customers trying to negotiate a better deal from AIG.

"They may try to use it to (take) out a little out of the price by saying 'you're not as good as you used to be,'" said Joyce Sharraf, managing senior financial analyst at A.M. Best. "But AIG is still the gorilla on the porch and can say 'take it or walk away.'"

AIG, historically, has maintained that attitude. Former Chairman and Chief Executive Maurice "Hank" Greenberg was vocal in his opinion that the company wouldn't "follow rates lower" in an otherwise softening rate environment.

And in an interview with last July, former Chief Financial Officer Howard Smith said, "We really believe that brokers and those insured need to be conscious about who you're buying coverage from."

...more...

"no impact" :rofl: