The three letters A I G probably represent the biggest symbol of the global economic meltdown more than any letters in the alphabet. The complicated financial instruments such as credit default swaps, derivatives and hedge funds stymie most average investors. For those who have lost money in their 401K’s or seen the value of their buildings and homes disappear, many consumers may be out for blood with insurance companies who have made bad trades which couldn’t be supported and now are asking for a taxpayer bailout. Fannie and Freddie and AIG didn’t have the proper financial reserves to backstop the risky mortgages they insured or traded. So, the government bailed them out with over $170 billion dollars to insure AIG didn’t fold and cause greater collapse to the global financial marketplace. There are reports that they took billions (us$) of this money and sent it to other countries. There is little doubt that the insurance marketplace, which today is primarily regulated at the state level, will face new federal, (US), and United Nations regulations going forward.

Some may argue that AIG’s problems were focused in the Financial Products division trading risky and complicated financial instruments. But the actual “insurance” portion of their business is far from healthy either. Thomas Gerber, a 23 year industry expert who has worked for The Department of Justice and the FBI as a consultant, says that in AIG’s 300 page annual report there is evidence that AIG’s 71 interlocking domestic US insurance subsidiaries are in serious hock to one another. “It’s a house of cards,” he says. This area is called “re-insurance” whereas insurance companies insure the liabilities of one another so no single company has to carry all that much risk on its books.

The problem however, is not just limited to AIG. Insurance companies of all shapes and sizes are suffering also. Regulators in over 30 states have taken over companies with over 500,000 policy holders. including life insurance and annuity sellers. Major insurance companies such as Prudential and The Hartford are being downgraded. Residential mortgage insurer The PMI group reported Q4 losses of $181 million. Bad news spreads fast. Plus insurance regulators in England, Germany, Mexico & China, are expecting problems..

There is new fear that many more insurance companies beyond AIG will also need bailouts. However, T. Rowe Price portfolio manager Jeff Arricale says “the property and casualty insurers have clean investment portfolios. They take premiums and invest them…in Treasurys and municipal bonds: lower risk assets.” Perhaps not all insurance companies want bailouts. Travelers CEO Jay Fishman wrote to then Treasury Secretary Henry Paulson that “private market solutions” would be the best solution for companies in poor financial condition. William Berkley, chairman of the American Insurance Association says that P&C insurers don’t face the same type of risk as financial insurers.

So, some companies need help. Others say they don’t. Who knows what? It seems as if the public becomes aware of these gigantic problems once they’ve already occurred and have little they can do except wait to hear the next round of bad news. Then, they’re asked to foot the bill to save the companies.

In order to determine the best course of action, some experts are suggesting we look at the reasons for providing assistance to banks and financial institutions in the first place. First, while consumers may feel our economy is far worse that just a recession, the government is bailing out the banks in order to avert a depression. Secondly, the government feels if major banks were to collapse; the entire global financial sector would be at risk. Thirdly, weak banks can’t lend and banks need to lend right now.

What we know is that the Treasury Secretary Timothy Geithner has indicated he will soon announce details about acquiring the toxic assets that sit on the balance sheets of banks and insurance companies. If you are leading an organization through this downturn, you’re got to be introducing major changes- and encountering resistance to them. It’s wise to engage with the resisters, learn from them, and alter your course if they suggest smarter adjustments to your ideas. A big unanswered question is how these assets will be priced. Right now, companies that foreclose on properties are pricing them using fire sale tactics. That’s how they’re moving these properties and they want them gone and gone now. In Southern California, foreclosed properties in vulnerable areas such as Desert Hot Springs, are going for 20% of what single family homes sold for only years ago. Yes, homes that sold in 2006 for $300,000 are being had at $60,000.

Real estate, like politics is “all local.” So where can organizations large and small go with real estate assets they need to dispose of? A local Southern California company, Terra Asset Management.com is an expert in liquidation risk and works to sell property to interested parties. Operating in Palm Springs, Terra Asset Managers and its partners have unique foreclosure expertise and are the leading foreclosure specialists in Southern California and operate across the United States. Terra Asset Management.com can cut your time of sale down. Equally important, Terra can limit your liquidation risk and most importantly Terra has the resources and the relationships to get your property sold quickly.

The 4 step process of Terra Asset Management.com takes the worry off your shoulders and handles all aspects of selling the property.

Terra Asset Management.com is a full services real estate firm and has contractors,
CPA’s, legal and other help that may be necessary for you to sell your property.

If you are a bank, fund, insurance company or holder of foreclosed homes or commercial property and you need them sold, call the foreclosure experts, Terra Asset Management.com. Charles Stewart can be reached at (760) 866-0021. Or email : reolord@aol.com