McCain says let 'em fail, cites potential "moral hazard" that could come with government bail outs.

The problem with just letting AIG fail is that the disruption to the insurance industry will be felt dramatically and internationally. There are probably 5-6 Insurance companies that do what AIG does. Ace, XL, Chubb…. Collectively these insurers do not have the capacity to absorb all the AIG business that will be looking to be placed. The stuff that does get placed will most certainly will be placed at prices significantly higher than what AIG was offering. If (when) AIG fails it will signal the return of a hard market. For some of these larger companies looking for insurance, new risk management financing alternatives will emerge. Ultimately, it will lead to structural changes within the industry.

Good analysis, Greg. Seems like Ben and Henry were thinking the same thing.

I just returned from the eInsurance symposium, and the president of ACE USA was a scheduled speaker on Wednesday morning. Alas and alack, he decided he had better things to do that morning. No hard feelings, but I would have loved to get his commentary.