CHARTIS CONCERNS CAUSE AIG SHARES DROP

AIG stock lost nearly 15% in value on Monday following a report by investment research firm Sanford Bernstein that the New York-based group had a non-life reserve shortfall of around $11.9bn. Bernstein Research analyst Todd Bault reported that the bulk of AIG's reserve problems were in its long-tailed casualty business, with general liability lines accounting for $5.6bn, professional liability lines accounting for $2.6bn and workers' compensation accounting for $1.8bn. Mr Bault said that the findings marked "nearly the opposite behaviour that we expect", given that that reserves at AIG's rivals have been rising. The report also appeared to contradict the conventional wisdom that AIG's financial difficulties were concentrated on credit default swaps and other derivatives in the book of business at AIG Financial Products. Chartis, the group's renamed p/c operation, has been widely seen as the solid foundation of the group's future. Mr Bault wrote that if his findings were reasonable "AIG would likely have to take some kind of reserve charge" prior to an initial public offering of Chartis, saying that such a charge could even prevent an IPO from taking place. AIG's shares lost 14.7% in value to close at $28.40 in Monday's trading. Yesterday marked the official debut of the Chartis brand in the UK, part of the global rebranding of AIG non-life businesses.