Reply #88: Investigation into insurer AIG expanded [View All]

[UpInArms]

Probe into whether performance yardstick was inflated

http://msnbc.msn.com/id/7358796/

NEW YORK - Shares of American International Group sank Friday after a report that regulators expanded their investigations into whether the insurer inflated a closely watched performance yardstick.

“There is the ongoing uncertainty over what shoes might next fall,” said Thomas Russo, who helps invest more than $1 billion for Gardner Russo & Gardner in Lancaster, Pennsylvania, and owns AIG shares. “Uncertainty chases away investors.”

Regulators are examining whether AIG, which this week admitted improper accounting going back 14 years, inappropriately capped its underwriting “loss ratio” — the percentage of each dollar of premiums used to pay claims — and potentially boosted the firm’s surplus capital, the Wall Street Journal reported, citing people familiar with the matter.

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Surplus capital data can be used to determine how much insurance an insurer can sell.

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"no impact" :rofl: