AIG says it needs government support

Posted Feb. 26, 2010 at 7:57 a.m.

Associated Press | AIG said Friday it lost $8.87 billion in the
fourth quarter as its general insurance business remained weak and it
ran up expenses from paying back government loans.

The troubled insurer also said in an annual regulatory filing that it
may need additional support from the government. However, AIG has
included such warnings in past filings with the Securities and Exchange
Commission.

The fourth-quarter results were an improvement from the $61.7 billion
AIG lost in the year ago period, but they were worse than analysts
expected. 


They also followed two straight profitable quarters.

The company reported a 2.2 percent drop in new premiums in its Chartis general insurance business, compared with a year earlier, and attributed the slide in part to the weak economy. It also had lower sales of life insurance products.

AIG also reported $6.2 billion in expenses from repaying government loans.

Investors weren’t happy with AIG’s news, and bid its stock down nearly 6 percent in pre-opening trading.

The concern in the market is that AIG’s insurance business, which was not the cause of its near-collapse in 2008, needs to be stronger for the company to keep repaying the government and become independent again.

New York-based American International Group Inc. said Friday it lost $65.51 per share in the last three months of 2009. The compares to a loss of $458.99 per share in the fourth quarter of 2008.

On average, analysts surveyed by Thomson Reuters forecast a quarterly loss of $3.94 per share.

AIG was bailed out in September 2008 by the government as the financial crisis spiraled out of control. The insurer has received aid packages with a total value of $182.5 billion from the government. In return for that financial support, the government received an 80 percent stake in AIG.

The company was undermined by underwriting risky credit derivatives contracts. A plunge in the value of those contracts was the primary driver of AIG’s near-collapse.

AIG has been working for the past year and half to sell assets and streamline operations in an effort to repay government debt. Since receiving government bailout funds, AIG has completed 19 unit sales or asset transactions.

It reported Friday that it continues to unwind its Financial Products Group, the unit blamed for AIG’s downfall.

Earlier this month, MetLife Inc. confirmed that it is in talks with AIG to buy one of AIG’s insurance units. Media reports price the deal at as much as $15 billion. The two companies have been in discussions for months about a potential deal for AIG’s American Life Insurance Co., known as Alico.

Alico is an international life and health insurance business that operates in more than 50 countries.

On Friday, AIG said it is continuing to address funding needs and explore options for restructuring its aircraft leasing unit, International Lease Finance Corp., and its American General Finance Inc. division.

 

3 comments:

  1. deltonahacker Feb. 26, 2010 at 1:32 pm

    Oh yeah! And just recently, how loud was the public uproar over the millions and millions of dollars in year end bonuses given out to all of AIGs ‘top dogs’? And Obama doesn’t do a thing about it. We, the government, own 80% of this company and the best Obama can do is be a moderator at a health care talk fest between Dems and Repubs. Let’s nail this entire management group out the door. Get someone like Iacocca to rebuild this company into one that can make profits and not be an everlasting drain on the taxpayers. Always with thier beggin’ hands out for more. Read My Lips…”NO MORE BONUSES”.

  2. No bailout again Feb. 26, 2010 at 2:41 pm

    Too bad the investors aren’t happy with the two straight profitable quarters. It’s way past time for the executives to stop expecting bonuses. There are too many people now who are looking for a decent job or salary, much less a bonus. Quit funding AIG, and let them tighten their belts.

  3. TheSourPatch March 8, 2010 at 4:32 pm

    Government has two choices- fund AIG and let them run their business, or pull the plug.
    This company is on its second or third CEO already, replacing management is pointless. The current management team did not create this mess and is entitled to be paid for its efforts. Everyone that works there is entitled to be paid. They have contracts, and Obama should not be trying to break their contracts.
    We never should have bailed AIG out, but now that we have we have to live up to all of their contracts or close their doors. You can not pick and choose…pay rank and file workers, but deny bonuses. Pay Xerox lease, but deny CDS payments…..these are all legitimate contracts that need to be paid, and will be paid as long as the US Govt is writing checks.