So far, investors are shrugging off news that American International Group Inc (NYSE:AIG) is acquiring Validus Holdings, Ltd. (NYSE:VR). While VR stock was up a whopping 44% in response to the generous offer, AIG stock was just a bit in the red following Monday’s announcement.

What gives? A handful of analysts have chimed in bullishly, and obviously AIG’s top brass are waxing optimistic. Investors, however, seem to know that American International Group is a work in progress, and there’s no real assurance this deal solves the bigger problem AIG faces … poor underwriting decisions. Until existing issues are shored up, traders remain reticent, and for good reason.

AIG Deal Means New Markets

The official offer: Insurer American International Group is prepared to pay $68, in cash, per share of Validus Holdings, making the buyout offer of the reinsurer worth a total of $5.56 billion.

Whether it’s a fit or not for AIG is a matter of perspective. Reinsurance isn’t quite American International Group’s milieu, which is now focused extensively on life and business property insurance lines. As relatively new CEO Brian Duperreault commented on the deal, though, “I’ve been involved in running reinsurance companies or advising them for a long time. And I particularly like the reinsurance business as additive to what we do.”

The few analysts who’ve already chimed in on the matter agree that the foray into the new market should bear fruit. As Wells Fargo analyst Elyse Greenspan put it, “While the AIG shares may initially trade down on the reinsurance exposure it is acquiring — we would be buyers as we focus on the accretion from this transaction. AIG will still have excess capital after this deal is done.”

There’s a reason investors aren’t as convinced.

AIG’s Performance Lagging

American International Group has, to put it plainly, been a poor performer of late.

Revenue is likely to roll in down more than 8% once 2017’s final numbers are posted in early February, and the pros presently expect another modest revenue dip for 2018 to extend what’s become a multi-year streak. The company’s still profitable, to be fair, though not profitable enough.

Chief among its troubles is underwriting woes — it’s just not figured out how to do it well. Tom Bolt, who formerly held a similar role with Berkshire Hathaway Specialty Insurance, was named American International Group’s Chief Underwriting Officer in December on hopes that his experience could alleviate the insurer’s struggle on this front.

The core reason Duperreault was hired to replace Peter Hancock as CEO in mid-2017 was Duperreault’s insurance experience. Hancock was an adept leader with solid banking experience, but ran AIG too much like a bank and not enough like an insurer. In the meantime, Marsh & McLennan Companies, Inc. (NYSE:MMC) executive Peter Zaffino was brought in to broadly oversee AIG’s insurance operation.

All are skilled veterans. The fact that three outsiders were brought in over the course of the past few months, though, may point to how dire the situation is for American International Group.

AIG CEO Looking For Deals

Would-be AIG shareholders may also be stymied by just how aggressively Duperreault is moving. The echoes of multiple divestures are still ringing.

This is the same AIG that required a massive government bailout a decade ago. While it’s been stable for years, it’s still remained on the defensive that whole time. That’s been part of its effort to play catch-up with the money it was forced to repay for that loan. Only recently has a light at the end of the tunnel started to shine. Now the company just took a step back into the liability tunnel.

Were it the first time Duperreault had done so, it might be dismissible. It’s not the first time, though. In November AIG was looking for a way to acquire Voya. The two parties ended up walking away because they couldn’t come up with a price palatable to both parties. As Bloomberg Gadfly reporter Gillian Tan put it:

“For AIG, Voya isn’t the only game in town, and its interest is a positive sign that the insurer is working toward its goal of — in new CEO Brian Duperreault’s words — using acquisitions in part to build a ‘more balanced commercial business that can deliver consistent underwriting profits.'”

It’s possible Duperreault is looking to make deals just for the sake of deal-making, distracting from taking on more relevant, critical challenges.

Looking Ahead for AIG Stock

Those aren’t criticisms of American International Group, to be clear. They’re just observation and questions.

They’re good questions to be asking though. And the fact that AIG stock hasn’t budged in response to the news suggests investors are indeed mulling these things. A buyout may or may not be what the company needs most right now.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.