In yet another bad quarter for what was once the Dark Star of the insurance universe, AIG announced a worse then expected loss of $5.36 billion yesterday, tied largely to it's ill fated foray into mortgage related investments.
It wasn't long ago that AIG routinely racked up record earnings from quarter to quarter and was a stock and company beloved by Wall Street and stock analysts who were enamored by the management of former CEO Hank Greenberg and his team. Now, after being forced out by the maurading ex-governor, ex-attorney general Elliot Spitzer, the company has fallen on hard times and it's reliance on mortgage related investments and securities is a constant drag on performance and earnings.
The question is, does this portend any changes as this giant that dominates the structured settlement industry falters in the short term and will the current management team and style that has dominated that company for so long stay intact?
Only time will tell and as the rest of the quarterly earnings of other life and casualty markets is going to make for some interesting reading to see which companies avoided the time bomb of mortgage securities and which ones will be poised to grow once the current shake out ends. The bigger issue for structured settlement brokers and life markets is whether is contraction in capacity due to losses and increases in reserves is going to further slow the pace of claims settlement that is plaguing the settlement business this year.
Conversations with just about any settlement broker will tell you this is shaping up as a lean year, definitely not a growth market, with the fact that claims departments are sitting on cases and delaying settlements if possible to conserve cash is impacting our profession. Obviously, this is only a temporary slow down and one that will be followed by a burst of activity as cases have to eventually be settled, litigated or paid, but for the time being it's putting a pinch on the structured settlement market and is going to make expansion into new areas of settlements of paramount importance for most firms.
In short, it looks like rough sailing for the balance of 2008 until this recent round of investment idiocy works itself out so settlement professionals need to do a couple of things in my opinion.
1. Be careful where you spend your marketing and promotional dollars.
2. Invest in new markets and opportunities such as structured sales, non-qualified settlements and legal fee marketing.
3. Invest in technology that allows you to market your firm inexpensively and with great precision so that you can define your expertise and reach your new and existing customers more easily.
If you haven't checked out my seminar on internet marketing for settlement professionals, why don't you take some time this weekend and look it over. You might find it interesting and helpful, and while your at it join Speaking of Settlements so that you can beging to network with your peers and raise your internet profile immediately.