Investor's Checklist: Asset Management and Insurance

Look for diversity in asset management companies.  Firms that manage a number of asset classes - such as stocks, bonds, and hedge funds - are more stable during market gyrations.  One-hit wonders are much more volatile and are subject to wild swings.

Keep an eye on asset growth.  Make sure an asset manager is successful in consistently bringing in inflows greater than outflows.

Look for money managers with attractive niche markets, such as tax-managed funds or international investing.

Sticky assets add stability.  Look for firms with a high percentage of stable assets, such as institutional money managers or fund firms who specialize in retirement savings.

Bigger is often better.  Firms with more assets, longer track records, and multiple asset classes have much more to offer finicky customers.

Be wary of any insurance firm that grows faster than the industry average (unless the growth can be explained by acquisitions).

One of the best ways to protect against investment risk in the life insurance world is to consider companies with diversified revenue bases.  Some products, such as variable annuities, have exhibited a good degree of cyclicality.

Look for life insurers with high credit ratings (AA) and a consistent ability to realise ROEs above their cost of capital.

Seek out property/casualty insurers who consistently achieve ROEs above 15 percent.  This is a good indication of underwriting discipline and cost control.

Avoid insurers who take repeated reserving charges.  This often indicates pricing below cost or deteriorating cost inflation.

Look for management teams committed to building shareholder value.  These teams often have significant personal wealth invested in the businesses they run.



Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey


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Investor's Checklist: A Guided Tour of the Market...

AIA bosses predict ‘disastrous’ Pru takeover

May 25, 2010

AIA bosses predict ‘disastrous’ Pru takeover

Christine Seib in New York and Leo Lewis in Hong Kong


Prudential’s $35.5 billion takeover of AIG’s Asian insurance business will be a disaster, according to senior executives at AIA, the Hong Kong-based company that the Pru is struggling to acquire.

One source at AIA in Hong Kong told The Times that there was a “tangible undercurrent” of concern over the takeover and that several executives had questioned Prudential’s ability to manage AIA effectively.

The executives’ comments came as it was reported that Mark Wilson, AIA’s chief executive, had told friends and industry executives that he planned to quit if the deal went through.

According to press reports last night, Mr Wilson said that he would step down because the combination of AIA and the Pru’s Asian business was “unworkable”.

Two senior executives, Steve Roder, AIA’s finance director, and Peter Cashin, its legal head, have already quit the company.

The timing of the comments are inconvenient for Prudential, coming just hours before it debuts its dual listing in Hong Kong, with a secondary listing in Singapore.

Traders arriving early at their desks in Asia on Tuesday said that rumours over possible executive quittings would have a “definite negative” impact on today’s dual listing of the Prudential in Hong Kong and Singapore.

Prudential had said earlier this month that the 43-year-old American, who joined AIA in 2002 from AXA, the French insurer, would remain as chief executive under the new ownership.

AIG, which must extract maximum value from AIA in order to repay its giant US government bailout, scrapped a plan to float AIA in favour of a sale to Prudential, which was announced in March.

Mr Wilson had stood to make a fortune out of the float and would have been chief executive of the independent listed company.

Other top AIA executives are expected to follow him out the door, if the deal closes. One person at the company told The Times that a number of workers, also annoyed by the fact that AIA’s float was scuppered, were watching how Mark Wilson responds and intend to take their lead from him.

But the source also suggested that Mr Wilson may be allowing rumours of his intention to quit to try to get an early sense of his worth to Prudential, and that his decision to quit or stay would actually depend on how “hands on” Prudential intends to be in a region it has only limited experience in.

The Pru said on May 17 when it published its prospectus that Mr Wilson would remain as chief executive of AIA, suggesting he had given at least an informal commitment to stay on.

The timing couldn’t be more inconvenient for the Pru, coming just hours before its shares are due to start trading in hong kong and singapore.

The Pru declined to comment.

http://www.timesonline.co.uk/tol/news/world/asia/article7135625.ece

AIG Reduces Fed Borrowings by $25 Billion

AIG Reduces Fed Borrowings by $25 Billion
By AP / STEPHEN BERNARD Tuesday, Dec. 01, 2009


(NEW YORK) — American International Group Inc. on Tuesday slashed the amount of money it owes the government by $25 billion as it moved two subsidiaries into special holding units ahead of their planned spinoff or sale.

AIG moved American International Assurance Co. and American Life Insurance Co. into special purpose vehicles, which are used ahead of a move to separate a unit from a parent company. The government is receiving preferred equity stakes in the two life insurance companies worth $25 billion in exchange for a reduction in the amount of money AIG owes the government.

AIG will continue to hold the common stakes in AIA and Alico until it determines whether to complete initial public offerings for the companies or sell them privately. No timetable yet has been announced for when an IPO or sale will be completed.

Shares of the conglomerate based in New York rose $1.49, or 5.2 percent, to $29.89 in premarket trading.

AIG was bailed out by the government last fall at the peak of the credit crisis. As losses continued to pile up, the government eventually extended AIG an aid package worth more than $180 billion. The government also received a nearly 80 percent stake in AIG in return for the support.

The insurance giant has been selling assets and spinning off divisions in an effort to help repay the government debt.

As of Sept. 30, AIG had tapped $122.31 billion of the aid package and owed the government $85.66 billion in loans. Tuesday's separation of AIA and Alico would reduce the outstanding aid package to $97.31 billion and the amount owed in loans to $60.66 billion. "AIG continues to make good on its commitment to pay the American people back," AIG CEO Robert Benmosche said in a statement.

The government received a preferred stake in AIA, an Asian life insurer with more than 20 million customers, worth $16 billion. The preferred stake in Alico, an international life insurance firm that operates in more than 50 countries around the world offering life and health insurance, is worth $9 billion.

AIG said it would take a $5.7 billion charge during the fourth quarter tied to accelerating the moves of AIA and Alico into separate, stand-alone units.

Benmosche reiterated AIG continues to expect volatility in quarterly results as the insurer continues to restructure its operations to repay the government.

The plan to separate AIA and Alico and give the government $25 billion in preferred shares of the two companies was first announced in late June. AIG had been discussing sales of the units as early as March.



Read more: http://www.time.com/time/business/article/0,8599,1943739,00.html#ixzz0Yy1gaCuf