American International Group, Inc. (AIG) reported loss of US$5.3 billion for 2007 Q4, and a net income of US$6.2 billion for the full year 2007, representing a 55.9% decrease over the prior year.
In 2006 Q4, AIG reported a profit of US$3.4 billion. "The 2007 other-than-temporary impairment charges resulted primarily from the significant, rapid declines in market values of certain residential mortgage-backed securities in the fourth quarter, for which AIG cannot reasonably determine the recovery period will be temporary," the company reported in a statement.
Fitch Ratings says the U.S. property and casualty insurance industry will need to produce a combined ratio of about 95.5% in 2008 in order to meet the goal of an 11% return on surplus.
Fitch made this observation in a report outlining the rating agency's five-factor model for determining return on surplus. The five factors in the forecasting model include:
â€¢ combined ratio (underwriting losses + expenses)/net premium;
â€¢ investment yield (investment income/invested assets);
â€¢ operating leverage (net premium/surplus);
â€¢ asset leverage (invested assets/surplus); and
â€¢ tax rates (the level at which pre-tax income is taxed).
For the purpose of forecasting into 2008, the ratings agency assumed operating leverage to be 0.8x, asset leverage to be 2.4x and a tax rate at the long-term average effective rate of 23%.
It is huge cost to California Insurer in history.
Please be noted the following quotes.
Of the 23 fires, the Witch Fire in San Diego has caused the most property damage so far and is likely to result in insured losses of US$600 million to US$1 billion
The fires have burned more than 465,000 acres of land and destroyed more than 1,600 structures since Oct. 21.
More than 27,000 buildings remain under threat, and nearly 1 million people have been forced from their homes, making it the largest ever evacuation in California and the biggest in the United States since Katrina.
This image, captured by a NASA satellite on Tuesday, Oct. 23, 2007, shows smoke coming off the numerous wildfires from Santa Barbara,.Calif., stretching into Mexico, spreading over the Pacific Ocean. Walls of wind-whipped flames consumed hundreds of homes across tinder-dry Southern California on Tuesday, raising the number of people forced to flee the flames into the thousands.
Volunteer firefighters from Running Springs try to halt the spead of flames in Green Valley Lake, a community about 12 miles east of Lake Arrowhead. (Robert Gauthier / Los Angeles Times / October 22, 2007)
From Aviva Canada,
In the early morning hours of August 3rd lightning struck the Residence Domain Boise, a senior citizen's retirement facility in Gatineau, Quebec, which was insured by Aviva. A fire was ignited in the residence and over 70 firefighters responded. All of the residents were evacuated safely, quickly and without serious injury.
This dangerous incident could have turned into a tragedy if Shawn Brown's loss control recommendations were not followed. Fortunately, one year prior to the fire, in August, 2005, Shawn Brown, Sr. Loss Control Representative, Ottawa office, surveyed and inspected the Residence Domain Boise and made these recommendations:
Although the fire alarm system is tested annually, as the present time, documented fire drills are not held. For improved risk management it is recommended that documented fire drills be held on a minimum of an annual basis with records of these drills maintained.
At the time of this visit, there were no smoke detectors provided in unit #247 A&B. Smoke detectors should be provided in each unit, at each floor level. Once installed the detectors should be tested on a minimum of an annual basis.
Claims are simple to file, but the procedure varies from one plan to another. Some plans require you to pay the health care providers and submit your receipts with a paper or electronic claim form to the insurer for reimbursement. Other plans provide you with a drug card or dental identification card, which allows the pharmacist or dentist to submit the bill to the insurer electronically and receive payment directly. In either case, the confidentiality of your information is protected.
Typically, you must file claims within one year after you incur the eligible expenses, although the filing period may vary. Life and health insurance companies are committed to considerate and prompt payment of claims and they continually make changes to speed up the process. A straightforward health or dental claim may be processed within a week or two; more complicated claims, such as claims for disability benefits, may take longer.