Advisen Survey Documents Risk Managers' Continued Confidence in AIG After Government Bailout

2008-10-02 20:44:04 -

- Mason Power GM - Advisen +1.212.897.4796 w +1.917.348.3998 m mpower@advisen.com Advisen Ltd., the leading provider of content, analytics, and technology to the global commercial insurance industry, today released a special report based on a survey of risk managers following the American International Group (AIG) liquidity crisis. Advisen sought to measure confidence in AIG after the $85 billion loan by

the federal government and whether current AIG customers planned to consider alternatives to AIG for their existing policy or for their next annual renewal. Sixty-eight percent said they are "very confident" or "somewhat confident" in AIG's financial strength, yet 71 percent of AIG commercial lines policyholders plan to get quotes from AIG competitors when their policies renew. In assessing whether this volatility will reverse the slide in premium pricing, Advisen predicts that AIG will compete vigorously to retain business, potentially intensifying price competition in an already-soft insurance market.

This Special Report is based an exclusive survey conducted by Advisen from September 23rd-25th with 1,000 respondents, eighty-four percent of whom have insurance decision-making authority for their companies, of which 76 percent identified themselves as risk managers.

"Many insurance buyers recognize the crisis at the AIG ultimate parent level didn't affect the solvency of the insurance subsidiaries, but nonetheless there was immediate reaction among brokers and buyers to look at all options," said David K. Bradford, EVP and Chief Knowledge Officer of Advisen. "After the federal loan was secured, it's clear that the marketplace responded with support for AIG. Still AIG will have to fight to keep its book of business and this fight will likely drive further reductions in premium pricing."

Some buyers are concerned that the AIG companies could be damaged by the loss of too many policyholders, defections of key personnel, by a further rating agency downgrade or by being sold to lower rated companies, but despite these concerns, there is a deep reservoir of good will towards AIG. Survey respondents were also generally complimentary about how their brokers have handled the crisis.

Excerpted questions from the full report include:

-- "Do you support or oppose the announced decision by the Fed to loan AIG $85 billion?" Results in the paper show that support of the loan is correlated with whether or not a respondent's company is insured by AIG.

-- "If you are considering replacing AIG, why?" Company size is a key driver for respondents to this question.

-- "Which best describes your attitude towards the financial strength of the AIG insurance subsidiaries?" Results varied by industry group with risk managers of financial services companies most confident.

-- "What affect will recent developments at AIG have on the insurance pricing cycle?"

In written comments, some survey participants were highly critical of AIG's executive management:

"General crunch was mismanaged and lacked any sort of forethought by AIG's management team."

"AIG, have you started your ERM program yet?"

While respondents were critical of AIG executives for the liquidity crisis, many are rooting for the company's success:

"I'm confident they will get out of this crisis."

"AIG has been the bedrock of the insurance industry for many years and has provided the competition and balance that is often needed."

Advisen will shortly publish a Special Report on the results of a similar survey with over 600 broker responses. The nine-page Advisen Special Report on the Risk Manager survey results, plus the upcoming broker survey report, can be purchased for $189 by sending an e-mail to corner@advisen.com. The report is available to the press by request to mpower@advisen.com.

About Advisen

Advisen Ltd. equals success for insurance professionals, driving growth and profitability through the broadest platform of analytics and information services. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry's deepest data sets with proprietary analytics and applications that drive the risk and insurance lifecycle. Advisen is headquartered in New York with offices in London. For more information, visit www.advisen.com or call 212.897.4800.

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