|By Meg Green|
|A.M. Best Company, Inc.|
United Guaranty offers a service to review mortgages on behalf of banks "to make them rescission-proof," he said.
The process includes a comprehensive credit and documentation analysis at loan origination and immediately after loan closing to address the factors that most commonly lead to denials, rescissions, and payment delays when claims are filed. These include lack of documentation, loan attributes changing prior to closing, underwriting issues, and fraud and misrepresentation, the company said in a statement.
The service allows banks "to not worry about the reserves," Benmosche said. "It also gives us an enormous window into the mortgage-backed market. This is how we will gain insight into this investment. You get above-average returns if you get it right, but you don't want to pick up a bag of stuff that isn't good."
AIG's involvement with mortgage-backed securities and derivatives led to a liquidity crisis in 2008 that resulted in the federal government stepping in with a financial bailout to keep the company afloat.
Last year, AIG filed a lawsuit against
According to AIG's complaint, originally filed in
The complaint says
AIG has come a long way since its federal bailout, Benmosche said
"Who would have thought that we would be here today? Go back to the end of 2010, and we were talking about AIG and you said, 'it's finished. It's over,'" Benmosche said.
"Who would have thought that we'd actually complete our restructuring? Who thought we could raise capital during the year? Who thought we could build our balance sheet? In fact, if you look at the things we did, we got almost to
Because AIG is scheduled to release its fourth-quarter and year-end 2011 earnings results next week, Benmosche said he couldn't go into financial detail about the fourth-quarter results.
However, he said the company has about
"We have strong liquidity. We have strong capital," Benmosche said. "One of the challenges we had — and who would have thought — that AIG would be an investment-grade company without the support of the federal government. The company stands on its own, and it's in great shape."
Chartis, the company's commercial property/casualty operations and high net worth personal lines arm, has retained 90% of its customers. The company still insures 97% of the Fortune 1,000 firms, he said.
He said the company did not cut rates to keep clients, but did paid claims.
"If you have a combined ratio of 100-plus, it's called claims," Benmosche said. Clients "stayed with us because we were value added to them, not just the cheapest insurance they could buy."
For instance, one bank lowered its commission to offer customers a better price, and found it sold more annuities and made greater revenue as a result.
"We didn't give up our spread," Benmosche said. "They could do a lot more volume and do a lot more money. It's not taking more risk in the investment portfolio."
The U.S. government still owns 87% of AIG's common stock, but that isn't a bad thing, Benmosche said.
"I would rather have the U.S. Treasury as a shareholder than some of the activist shareholders you hear about. All of you in this room are not looking for great companies…you are looking for a great stock. You want to rent it, not own it. The U.S. Treasury is an owner, and they want to get out with a profit. I am happy to have them as a shareholder," Benmosche said.
AIG, whose reputation was battered in the wake of the financial crisis and a subsequent bailout, has been working to re-establish its brand. On
AIG's insurance subsidiaries currently have a Best's Financial Strength Rating of A (Excellent).
Shares of AIG (NYSE: AIG) were trading at
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