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AIG reports record $61.7bn loss

kaya'08

kaya'08

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BBC NEWS | Business | AIG reports record $61.7bn loss

Insurance giant AIG has reported a loss of $61.7bn (£43bn) in the final three months of 2008 - the largest quarterly loss in corporate history.

And the firm will receive an extra $30bn from the US government as part of a revamped rescue package.

AIG has already received $150bn in financial support - the biggest bail-out by far of any US company.

Stock markets slid sharply as AIG's plight underscored fears about the health of the global financial system.

The Federal Reserve and the Treasury said that AIG posed a "systemic risk" to the global financial system.

"The potential cost to the economy and the taxpayer of government inaction would be extremely high," they said.

"The additional resources will help stabilise the company, and in doing so help to stabilise the financial system."

As well as insuring households, AIG plays a key role in insuring risk for financial institutions around the world.

The news of AIG's historic loss comes as HSBC, Europe's biggest bank, seeks to raise £12.5bn ($17.7bn) to strengthen its finances following a 62% fall in annual profit.

BAIL-OUTS RECEIVED
AIG - $180bn
Bank of America - $45bn
Citigroup - $50bn
JP Morgan Chase - $25bn
Wells Fargo - $25bn
Goldman Sachs - $10bn
Morgan Stanley - $10bn
State Street - $3bn
Bank of New York Mellon - $3bn
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Insurance giant AIG has reported a loss of $61.7bn (£43bn) in the final three months of 2008 - the largest quarterly loss in corporate history.

And the firm will receive an extra $30bn from the US government as part of a revamped rescue package.
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How much do you reckon the ex CEOs will get as their golden parachute in pension pay-offs?
 
The level in which this pisses me off is unprecedented !!!!



Anybody with me?



:shock:
 
If AIG failed it would have profound implications for the stability of the system as a whole; from the point of view of those in government, AIG must be saved at any cost.

Anyways, more information here. For some reason the article in the OP that I linked to is linking to a different article about AIG, though.

EDIT:

FT said:
The new AIG plan – first revealed by the Financial Times last week – would see the government, which already owns an 80 per cent stake in AIG, gain a large holding in two of its most prized assets: American International Assurance (AIA) – AIG’s large Asian operations – and American Life Insurance Company (Alico), a global life insurance business with operations in more than 50 countries.

AIG would remain as a government-controlled holding company and run the main remaining asset, the US personal lines insurance, according to people close to the situation.

The company’s foreign general insurance and International Lease Finance Corporation (ILFC), AIG’s large aircraft leasing company, would be likely sold off at a later stage.

People familiar with the plan said the government would reduce the interest rate charged on a $60bn five-year loan to AIG from the current rate of 3 per cent over the London Interbank Offered Rate (Libor) to just Libor.

That could save AIG around $1bn a year in interest payments. Insiders said the authorities were also planning to ease the terms on a $40bn-holding of preferred shares in AIG, which are currently paying an annual interest of 10 per cent.

Financial Times
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Khayembii Communique said:
If AIG failed it would have profound implications for the stability of the system as a whole; from the point of view of those in government, AIG must be saved at any cost.

Anyways, more information here. For some reason the article in the OP that I linked to is linking to a different article about AIG, though.
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I agree somewhat. A controlled bankruptcy might be another option. I'm just pissed AIG got themselves into this situation
 
winston53660 said:
I agree somewhat. A controlled bankruptcy might be another option. I'm just pissed AIG got themselves into this situation
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There is nothing called a controlled bankruptcy. A bankruptcy is a bankruptcy, a very negative thing.

Also the US government had no choice. There are estimates that a bankrupt AIG could potentially cost 100 million jobs world wide and would take most of the major US banks and big business with it.
 
PeteEU said:
There is nothing called a controlled bankruptcy. A bankruptcy is a bankruptcy, a very negative thing.

Also the US government had no choice. There are estimates that a bankrupt AIG could potentially cost 100 million jobs world wide and would take most of the major US banks and big business with it.
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Who are the estimators?
 
Is AIG even savable? At this rate AIG alone will be hemorraging a quarter of a trillion dollars a year. Add in the stimulus and the wars in Afghanistan and Iraq and the amount of money that the government is spending is simply mind boggling. It can't be sustainable.
 
Kernel Sanders said:
Is AIG even savable? At this rate AIG alone will be hemorraging a quarter of a trillion dollars a year. Add in the stimulus and the wars in Afghanistan and Iraq and the amount of money that the government is spending is simply mind boggling. It can't be sustainable.
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I think in the end AIG will become more of a burden then it is worth. The government will probably end up turning its back on it and let it go headfirst into bankruptcy. At some point in the future if this crisis continues to get worse then i think that would be the most feasible solution. If it becomes a burden on the government and taxpayers it will be doing more harm then it is good.
Ideally they should break it up into smaller companies and reallocate there resources accordingly to be more efficient. I think that would be the best thing for AIG right now.
 
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Goldenboy219 said:
Who are the estimators?
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Saw it on CNBC today.

Point is that the cascade effect of a total faliure of AIG would be catastrophic for the US economy and the world economy. They are THE insurance company of most major companies, local and a regional governments and that is on top many many other areas of business. They are also the worlds largest financier and leaser of airplanes for example.

I think the end result will be a slow and some what painful but controlled break up of AIG into smaller companies of which some may be allowed to go bankrupt.
 
kaya'08 said:
I think in the end AIG will become more of a burden then it is worth. The government will probably end up turning its back on it and let it go headfirst into bankruptcy. At some point in the future if this crisis continues to get worse then i think that would be the most feasible solution. If it becomes a burden on the government and taxpayers it will be doing more harm then it is good.
Ideally they should break it up into smaller banks and reallocate there resources accordingly to be more efficient. I think that would be the best thing for AIG right now.
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AIG is not a bank.
 
Omfg sorry i just realized i wrote that. My bad.
 
kaya'08 said:
Omfg sorry i just realized i wrote that. My bad.
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It does/did however insure banks. So if a bank gave a loan to person X, then AIG insured the bank for any loss the bank might have. The problem was that there was no collateral to speak off to back up that insurance because when the property was less valued than the mortage.. then well..
 
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