) to market perform.
The insurance giant took a $1.8 billion net charge in the fourth quarter to pay for a boost in its casualty reserves. AIG's management says these reserves pertain to an accident that occured in the years 1997 to 2001.
Analyst Gregory Peters says the insurance industry is under-reserved for these accident years, and he thinks this issue will keep premiums at their high levels, and help to extend the strong property/casualty pricing cycle through 2004.
Peters says while AIG's size and diversification limited the financial impact of the charge, even AIG is not immune to market-related issues. He thinks it's unlikely that the current premium levels can further expand, and expects the stock to perform in line with the market.
Peters cut his $3.80 2003 earnings per share estimate to $3.35, and cut the 2004 $4.25 estimate to $3.75.