AIG in rescue deal amid big losses
American International Group (AIG) posted a record $61.7bn (£43.87bn) quarterly loss today and got a new but not necessarily final government bailout after officials concluded again that letting the insurer fail would threaten the world financial system.
AIG will get access to up to $30bn of new capital, after getting a commitment for $150bn in aid last year that gave the government a stake of nearly 80 per cent.
The latest bailout avoids for now any crippling credit rating downgrades that could force AIG to come up with billions of dollars it might not have.
The new rescue agreement increases the government's commitment to keeping AIG on life support.
The deal was announced just three days after the government announced a new bailout for Citigroup, which like AIG has struggled to sell businesses and raise cash to pay back bailout funds. Both companies are based in New York.
The market is "a pretty crummy place" right now, AIG Chief Executive Edward Liddy lamented on a conference call. He said fixing AIG could take "several years."
In agreeing to a new AIG bailout, the Treasury Department and the Federal Reserve cited AIG's operations in more than 130 countries, its role as an insurer for more than 100,000 entities including operations that employ more than 100 million Americans, and its more than 30 million US policyholders.
The government also acknowledged that today's bailout might not be AIG's last. "Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," the government said in a statement.
It said fixing the insurer "will take time and possibly further government support if markets do not stabilize and improve."
The quarterly loss, AIG's fifth in a row, equaled $22.95 per share, and compared with a year-earlier loss of $5.29bn, or $2.08 per share.
AIG's latest loss, a record for a US company, equaled about $465,000 a minute.
For all of 2008, AIG lost $99.29bn, wiping out profit dating back to the early 1990s.
The new bailout gives AIG more lenient terms on existing financing. It will convert some debt into a preferred equity stake for the government in two units, American International Assurance and American Life Insurance Co, which each have significant Asian operations.
AIG also announced plans to spin off part of its property-casualty business, to be renamed AIU Holdings.
The company said it believes it has adequate liquidity to keep operating for the next year.
- 1 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 2 Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
- 3 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
- 4 Homer Simpson has taken the ALS ice bucket challenge because of course he has
- 5 Do you realise just how foolish the UK looks?
Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
Gun instructor accidentally shot dead by nine-year-old girl with Uzi gun
Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
The 13 obscure UK laws you didn’t know you were breaking
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Jeremy Clarkson is a cultural tumour and needs to be removed, says comedian Frankie Boyle
Air strikes? Talk of God? Barack Obama is following the jihadists’ script after James Foley beheading
- < Previous
- Next >
iJobs Money & Business
£500 - £700 per day: Harrington Starr: Calypso Developer Calypso, J2SE, XML, ...
£35000 - £36000 per annum + benefits: Ashdown Group: A market leading financia...
£250 - £350 per annum + competitive: Orgtel: My client, a leading bank, is cur...
£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...