UBS predications of 30% loss of business proved wrong
AIG’s Chartis will lose at most 22% of its commercial insurance not the 30% predicted when the US government bailed it out, UBS analyst Brian Meredith said, Dow Jones reports. It could lose as little as 17%.
By the end of June, AIG's general insurance division, now known as Chartis, had lost 19% of its $51bn US commercial lines market share. Falls in the first half of 2009 versus the fourth quarter of 2008 were also lower than expected, Meredith said in a note to investors.
"While we expect Chartis to continue to lose market share, it is likely that the ultimate market share lost will be less than our original 25-30% estimate," the analyst wrote. "We now estimate 17-22%."
Predictions much worse
UBS had estimated that AIG would lose 25% to 30% from forced asset sales, damage to its reputation, and employee defections.
A UBS survey of corporate risk managers who purchase commercial insurance found that 57% had reduced the amount of cover placed with Chartis over the past year. But none expected further reductions.
Travelers has seen the largest gains in its share of the US commercial insurance market, seeing an increase of 32 basis points.
Other insurers take smaller shares
Other market share gainers include Chubb, Arch Capital, Ace, Axis Capital and WR Berkley (WRB).
"We now believe market-share gains for Ace, Arch Capital, Axis Capital, Chubb, and WR Berkley will be around half to two thirds of our original expectations, while Travelers does not change," Meredith said.
