I'm going to comment on this again and try to leave it alone. I think my position is being misrepresented and sure I may have misrepresented the original poster myself. I see managing to prevent an earnings spike as something completely different than pennies and decimals. And also, I don't want to confuse managing earnings with managing the business. Accounting principles and managing the business do provide timing opportunities to add a penny or two here and there but all I am saying is not to go overboard with this. Managing? Okay. Managing to the point of monkeying? Not so much.
Okay re: Elan, must have confused that with someone else and I'm lying again like I did to ole Donald by commenting more when I offered you the last word :), but been at it 23 years myself and have a few how-to books on balance sheets, cash flow, and income statements and probably have done all the things you have done, but for 12 years less and who knows what else. Anyway, I ask that they keep their reporting above-board (ie, as I said in a previous post, _adheres to the accepted principles_) and as long as they do that, I'm fine with it and sure, they do have options. I'm reading your post to say that they are working awfully hard at it (pardon me if I've misread it) but for me, let's not make them too smooth... please. It's hard to smooth out investment income, very hard. And if you do, that's when others start to ask if anything was learned about the last 7 years. Benmosche rebuilt the majority of the financial strength, however the reputation is what isn't totally rebuilt and is a work in progress (always a work in progress) and I believe a reason that AIG trades at the discount to BV that it is. But I think in the end, we are here for the same reasons, and opinions about how they are running things are what they are - and us armchair jockeys will always have opinions :). Good luck.
Your message is confusing. You mention “managing” earnings and despite your examples, I’m still not sure what you mean because you finish with “An earnings spike does them little good”. If they are managing to prevent an earnings spike, that is more than just subtle managing and more than "sweating the decimals". I think you need to be a little more clear on your meaning. Calling bonds to issue more debt at lower rates is not managing earnings, it’s managing the business. It’s a homeowner refinancing a mortgage (ie, good personal finance managing).
For whatever reason, I believe I remember you from the Elan board years ago. If so, you know what happened, if not, that is an interesting case study as well as AIG under Greenberg of “smoothing” earnings. Obviously there are different degrees and methods of managing earnings and sure, you run into cases where a company will have a clear-the-decks quarter when they know they will not meet expectations so in order to clean house, they’ll throw everything into one quarter. Managing earnings? Yes, although some with a more glass half-empty viewpoint might allege that the company is doing that to run interference and mask even poorer company performance. I say that AIG received 180 billion dollars from us and to borrow from Top Gun, they don’t have the best name in the industry. They need to be doing it better and cleaner than everyone else out there. My read of what you are suggesting is that they are not and if that's the case, yes, unfortunate in my view. If the auditor signs off on this managing as being based on clean accounting, then fine as long as the auditor knows what he/she is certifying. That hasn’t always happened.
I’m sorry. While no insurance company experts here (include myself) that I can see, I think you are in over your head here in talking about or suggesting this. I will give you the last word if you choose or you can ignore me and move on. But safe to say, I disagree with you.
If the company is doing that - and no, I don't believe they are and would suggest you are over-thinking this - then shame on them.
"Seems like this ~ $20B (currently) tax loss credit exception was allowed because someone at the FED was expecting a successful suit against AIG."
GREAT call - I have your tinfoil hat waiting for pickup. Let me know when and we can also talk about YOUR paymaster. He was probably disappointed today.
I'd be careful about all of this "managing" and "smoothing" earnings talk. They got sued for this when Greenberg was still in charge. Interest rates - they need higher rates, period. They do hedge and the notes in the quarterly lay it out for you- maturities and hedging. Going forward, they are going to have claims and not having higher rates puts an awful lot of pressure on underwriting which, while getting better, they have not been the best at, so, they need higher rates.