AIG suffers $62B loss, bailout revamped. TO BIG TO FAIL? AIG RESCUE PLAN CALLS FOR AIG TO BE SPLIT UP AND SOLD OFF – THERE IS NO PLAN FOR THE SURVIVAL OF AIG.
NEW YORK (CNNMoney.com) — Insurance giant American International Group reported a stunning $62 billion quarterly loss on Monday, while government officials unveiled their latest efforts to prevent the collapse of the firm.
AIG’s loss for the full year was even more dramatic — $99 billion. In 2007, the company reported a profit of $9.3 billion.
Key components of the plan included the government’s decision to commit another $30 billion to the firm in exchange for cumulative preferred stock. http://money.cnn.com/2009/03/02/news/companies/aig/index.htm
In September 2008 the Government provided AIG with an $85 Billion Dollar “bridge loan”. http://money.cnn.com/2008/09/16/news/companies/AIG/?postversion=2008091620
Additional loans to AIG brought that total to $150 Billion prior to the most recent $30 Billion increase. “The government has already lent A.I.G. $150 billion.” http://dealbook.blogs.nytimes.com/2009/02/23/aig-to-seek-more-government-aid/?partner=rss&emc=rss
The additional $30 Billion brings the total lent to AIG to $180 Billion.
AIG shares opened today (03/02/09) at 50 censt per share. (0.50) technically now a penny stock. AIG stock has dropped 98% in the last 6 months. http://dealbook.blogs.nytimes.com/2009/02/23/aig-to-seek-more-government-aid/?partner=rss&emc=rss
The Government now owns 80% of AIG.
AIG’s toxic assets have been removed from it balance sheet – to no avail. “Using a combination of money from the federal bank bailout and the creation of new structures to store toxic assets like bundles of mortgage-backed securities off the firm’s balance sheet. That appears to have failed to stem the troubles at the company.” http://dealbook.blogs.nytimes.com/2009/02/23/aig-to-seek-more-government-aid/?partner=rss&emc=rss
In January the Government appointed 3 Trustees to run AIG. “The Federal Reserve Board of New York has named 3 trustees to control the government’s 79.9% share of American International Group Inc., New York. The trustees are Jill Considine, a former New York banking commissioner; Chester B. Feldberg, former chairman of Barclays Americas; and Douglas L. Foshee, president and chief executive officer of El Paso Corp. The New York Fed said the appointments were made with the full support of the Treasury Department. The new trustees will control the taxpayers’ stake in AIG through the so-called “AIG Credit Facility Trust.” http://www.lifeandhealthinsurancenews.com/News/2009/1/Pages/Fed-Names-Trustees-For-AIG.aspx
Jill M. Considine, former Chairman & CEO of the Depository Trust & Clearing Corporation (DTCC) in New York, was Chairman of the Board of Directors of Fulcrum Group, a global administrator for hedge fund and alternative asset management industry. “Fulcrum is at a turning point in its evolution and is poised for further expansion in existing and new markets,” said Akshaya Bhargava, Fulcrum’s chief executive officer, in a press release. http://www.advancedtrading.com/showArticle.jhtml?articleID=208803159
While they won’t sit on AIG’s board, they will have all rights of AIG shareholders — including decisions about corporate governance to represent the equity stake. http://blogs.wsj.com/economics/2009/01/22/fed-releases-aig-trust-agreement/
The Obama Administration claims AIG is to big to fail, however, their is no plan for the survival of AIG. AIG is being split up and sold off to the highest bidder. The assets from those sales will come up at least $100 Billion short of repaying taxpayers.
In addition, there is no transparency concerning the sales of the assets and the Management of AIG is being undertaken by 3 Government appointed Trustees behind closed doors in Washington.
As their is no resue plan for AIG – it is to be split up and sold off in pieces – and as the value of the assets will fall $100 Billion short of repaying the US Government – the holders of AIG common stock will receive nothing. That explains why the stock is trading for 50 cents a share.
$100 Billion short of repaying the Government Loans. Don’t worry, it is only taxpayer money!
The assets AIG is attempting to sell is its American and Foreign Insurance units. The sale of these assets will only generate $17.4 Billion in revenue, leaving a $166.6 Billion shortfall on repaying the American Taxpayer. The proposed sales are hoped to generate the following revenue – 3 Japanese life insurance companies – $9.5 Billion; Chinese Insurance Companies $2.5 Billion; US Personal Insurance $2 Billion, US AIG Investments – $2 Billion; Phillipine Life Insurance $1 Billion, Canadian Insurance Comanies $400 Million – Total $17.4 Billion. http://www.insurancejournal.com/news/national/2009/02/11/97799.htm , http://www.businessinsurance.com/cgi-bin/news.pl?id=15008 , http://economictimes.indiatimes.com/News/International_Business/AIG_aims_to_sell_Taiwan_insurance_unit_in_Q1/rssarticleshow/3694102.cms
http://www.abs-cbnnews.com/business/10/05/08/aig-sell-japanese-life-insurance-units , http://afp.google.com/article/ALeqM5i811JmiLi3Wn1qoxzuAHZYZ_qW0w , http://www.insurancetimes.co.uk/story.asp?storycode=376658 , http://www.ft.com/cms/s/0/6a0a9468-8d9a-11dd-83d5-0000779fd18c.html?nclick_check=1