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The Travelers Companies, Inc. Message Board

  • kored35 kored35 Feb 25, 2011 5:20 PM Flag

    You said Travelers not Exposed to MUNIS ? >>

    YOU are going to learn the lessons of your lives very shortly imo !

    AIG’s gross unrealized gains on the municipal bond portfolio narrowed to $1.73 billion on Dec. 31 from $3.32 billion at the end of the third quarter, according to the filing. Rival insurer Travelers Cos., which holds a $39.5 billion municipal portfolio, said last month that gross unrealized gains on the securities narrowed to $1.6 billion from $2.8 billion during the period.

    The figures, reflecting market fluctuations that aren’t counted toward earnings, are monitored by investors and rating firms as a gauge of financial strength.

    Property-casualty insurers buy municipal bonds with policyholder premiums and hold the securities to pay future claims. Travelers, the only insurer in the Dow Jones Industrial Average, said this month its portfolio may face a higher risk of defaults, which could result in investment losses and reduced income.

    “There are a number of things that you can be concerned about at AIG, and this is one of them,” said Cliff Gallant, an analyst at KBW Inc., who has an “underperform” rating on the stock.

    AIG was rescued in 2008 after losses on securities tied to home loans. Robert Lewis, who stepped down as the company’s chief risk officer last year, said the insurer had underestimated the risk of subprime mortgages.

    The insurer, which has repaid the Federal Reserve, is majority owned by the U.S. Treasury Department, which plans to divest its shares. AIG said yesterday that fourth-quarter net income was $11.2 billion as the company booked gains selling businesses to help repay its rescue

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