Posted on 03/20/2009 1:16:34 AM PDT by givemELL
Most of this as-yet-undiscovered problem, Gober says, lies in the area of reinsurance, whereby one insurance company insures the liabilities of another so that the latter doesn't have to carry all the risk on its books. Most major insurance companies use outside firms to reinsure, but the vast majority of AIG's reinsurance contracts are negotiated internally among its affiliates, Gober says, and these internal balance sheets don't add up. The annual report of one major AIG subsidiary, American Home Assurance, shows that it owes $25 billion to another AIG affiliate, National Union Fire, Gober maintains. But American has only $22 billion of total invested assets on its balance sheet, he says, and it has issued another $22 billion in guarantees to the other companies. "The American Home assets and liquidity raise serious questions about their ability to make good on their promise to National Union Fire," says Gober, who has a consulting business devoted to protecting policyholders. Gober says there are numerous other examples of "cooked books" between AIG subsidiaries. Based on the state insurance regulators' own reports detailing unanswered questions, the tally in losses could be hundreds of billions of dollars more than AIG is now acknowledging.
(Excerpt) Read more at newsweek.com ...
The AIG uproar may only be beginning as AIG has such a LARGE international business and tens of billions have already passed thru the AIG CONDUIT to European entities.
The annual report of one major AIG subsidiary, American Home Assurance, shows that it owes $25 billion to another AIG affiliate, National Union Fire, Gober maintains. But American has only $22 billion of total invested assets on its balance sheet, he says, and it has issued another $22 billion in guarantees to the other companies.
"The American Home assets and liquidity raise serious questions about their ability to make good on their promise to National Union Fire,"
You have to wonder where the HELL were the auditors in all of this? Arthur Andersen went down in flames for less than this.
Auditors! We don't have to show you any steeeenkin' auditors! (Cue the socialization of risk enablers/co-conspirators firing bullets at you...demanding you give them YOUR gold.
I will confirm from experience that despite a bureauracy charged with the task, there simply is no oversight of the insurance industry here in the state of Kentucky. I came to realize that the insurers “regulate” our inspectors. Especially their junkets, luncheon dates, tee times, etc. Perhaps that charade worked back in the day when the industry tended to clean up their own mess.
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