AIG, Crisis over?

In this weeks follow up story on AIG, Mark Wahlstrom looks at the recent information on AIG and the government bailout and speculates that the crisis is probably over.

However, today's Wall Street Journal casts doubt on that theory in an editorial entitled, Free AIG. You can read the entire piece here, but essentially the WSJ is wondering exactly who put the AIG deal into play, was this really a necessary take over and possibly a chapter 11 for the parent might have been a better play in the long term. They even go to the extreme of saying the Fed needs to undo the deal.

So what does it all mean?

It means that a lot of financial and media types are starting to really take a hard look at these bail outs, the cost and impacts on society and whether or not these are going to have lasting negative impacts on society.

While I believe the crisis in confidence that imperiled the life insurance subsidiaries of AIG, specifically the structured settlement markets, it is obvious that this deal is going to totally reshape AIG in a way that will make it a mere shell of it's former self. Therefore, the watch word is caution on dealing with AIG for now.

Thats caution, not panic.

There is no reason to fear the life markets or to cash out funds or cancel pending deals. However, going forward you need to do standard risk analysis regarding the amounts you allocate to them in a structure or how long a duration case you are willing to place with them. Until this cloud is lifted and we know what the end game is for the life markets just be judicious as to how you proceed.