You ever get that feeling where, like, you know something won't happen but it would be, like, totally awesome if it did?
For instance, we know that Martin Shkreli isn't going to win a Grammy for the rap album he produces while in federal prison, but wouldn't it be totally awesome if he did? And while we know that Warren Buffett will never start dating Khloe Kardashian and become a reality TV character, don't you kind of definitely want to see that?
What we're saying is that we all love whimsy, and perhaps no one loves whimsy than Citi analyst Todd Bault. See, Bault covers AIG for Citi and - like an insurance sector analyst at the end of his rope - he is done being constrained by the petty constraints of universal logic.
These days it seems, Todd would much prefer to traffic in DOPE IDEAS like the one in a note published yesterday.
Bault started off by dropping a truth bomb on the insurance giant...
AIG has a problem
Investors are increasingly sympathetic to the activist case for a dramatic breakup, while AIG management has rejected these calls and pushed for different dramatic change.
But Todd's not just picking on AIG...
Insurance FinTech has a problem
As the tech industry moves to disrupt payments, mortgages, and investing, insurance will likely prove much more difficult to attack. Its bespoke, interconnected, and hard to automate nature has been a hindrance to innovation for decades, and despite progress remains an issue.
AIG is a mess and insurance has not been a sext target for the FinTech revolutionaries making it hard for AIG to get in on the creeping trend of creating new products for new users on the fly.... Hey, tell us something we don't know, Bault.
Idea: GOOGL buys AIG and makes it (and insurance) modular
Given that AIG has already committed to modular disclosure and an embrace of data science, and is trading 30% below book, there is a real opportunity for a major tech firm like GOOGL and an investment bank to buy AIG and turn it into an insurance FinTech laboratory. There would be great benefits to all parties, investors, the insurance industry, and society itself by making insurance a better product.
Damn Bault, you crazy!
Google is going to buy one of the world's largest financial firms and turn it into a "FinTech lab" for the betterment of insurance? Does that entail putting actuaries on motorized razor scooters and making underwriters do meditation on Wellness Wednesdays?
Also, there's the small matter of Google dipping not a toe into financial services, but both legs and part of its torso?
What's up, Bault?
This idea is audacious, but that doesn't mean it's wrong
Of course GOOGL could not literally own an insurer owing to the volatility, but we describe a procedure to obtain control of research, data, and strategy, keeping most of the investor base as insurance investors. There are lots more reasons this likely won’t occur, but there is a perfect convergence of reasons why it might be exactly what AIG and the insurance industry needs. And the tech community could help solve what could well be one of the most challenging problems it could tackle
You know what, why not? Why can't Larry Page be the new Hank Greenberg? Why can't a massively important insurance company just become another one of Alphabet Inc.'s protected, money-losing silos of experimentation?
Keep on keeping on, Todd Bault, you dreamer of dreams.