More reserve charges could be ahead for American International Group Inc. (AIG), according to analysts.
“They haven't gotten it right in the best of times,” said Paul Howard, director of research at Solstice Investment Research. “You look at their loss triangles. Reserves always get bigger over time as they learn more. They have a bad track record.”
AIG expects to take a charge of $4.1 billion in the fourth quarter to bolster the loss reserves for its Chartis property and casualty unit. The decision was made after the company's year-end review of loss reserves. About 80 percent of the charge will be put toward adverse development from accident years 2005 and older for four classes of business: asbestos, excess casualty, excess workers' compensation and primary workers' compensation, AIG said.
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