AIG Origin huge loss (on)
March 2, American International Group (AIG) officially announced its 2008 full year
and fourth quarter earnings report, the fourth-quarter net loss of up to 61.7 billion U.S.
dollars. Meanwhile, the U.S. Treasury and the Fed have jointly issued a press release,
AIG announced 300 billion in new capital injection.
&quot;The U.S. government thinking on the AIG bailout is already very clear,
that is, for the purpose of all to save AIG. Before the United States Government
should not intervene in the private sector is very mind, but now is
different.&quot; A Canadian hedge fund&#39;s chief investment officer of
the newspaper Liu Ying reporter said.
&quot;Lightening&quot; and &quot;assistance&quot;
The same day, AIG announced the establishment of AIU holding company, will be
AIG&#39;s commercial insurance business at present, foreign business and
property and casualty insurance business into a new holding company which AIU.
The original property and casualty insurance business, will become CEO of the new
In addition, AIG has also announced the creation of special entities, AIG holdings of
Asian business AIA (AIA) and the United States Life Insurance Company (ALICO)
would be placed in the special entity, for sale or public offering. The assets sold or
realized gains, will be used to repay federal loans to 60 billion U.S. dollars. New York
Federal Reserve Bank or its designated custodian, will become the manager of this
&quot;We believe this is the best, because the AIA and ALICO repay our debt
the U.S. government is very important. While taking into account the AIA and
ALICO&#39;s business development and maintain the commercial value they
deserve.&quot; Edward Lee Di said so.
Meanwhile, the Federal Reserve and U.S. Treasury jointly issued a press release, to
give AIG 30 billion U.S. dollars of new capital injection.
U.S. Treasury rescue once again reached for the reasons AIG, AIG&#39;s
collapse would cause the U.S. financial system, &quot;systemic risk.&quot;
&quot;AIG to 100,000 of the insurance institutions, including small businesses,
municipal-level government bonds, pension plans and many Fortune 500 companies,
which employ nearly 100 million Americans.&quot; U.S. Treasury Department
said in a news statement. &quot;In addition, AIG also holds 30 million American
policy, is a major non-profit organization for teachers and other agencies to provide
retirement insurance. And, AIG is one of many U.S. financial institutions trading
Not the market expected, in the new program, the Ministry of Finance announced that
AIG would have loans of 40 billion U.S. dollars to be accumulated from the priority
of debt securities to priority. This eliminates the AIG annual 4 billion U.S. dollars in
interest. At the same time, to give AIG 30 billion U.S. dollars of new
&quot;equity capital instruments.&quot;
In addition, prior to loan AIG 600 billion dollars in loans, the Fed will become a
priority in AIA and ALICO equity. Thus, in AIA and ALICO are sold or go public, the
U.S. Government can recover the investment.
Announced the news that day, AIG shares have rebounded after closing price of 47
cents / share, total market capitalization of 1.13 billion U.S. dollars. Day, the Dow fell
to 6763 points, its lowest level since 1997.
&quot;From the first notes into preferred securities, is directly injected into the
core capital of AIG. The government to do a lot to AIG to reduce the interest burden.
The U.S. government to do so, in fact, with the common shareholders have almost the
same. Preferred securities Usually there is no right to vote, that is not involved in
specific operations, but give priority to dividends. Therefore, it is between living in a
kind of debt and equity securities. &quot;U.S. Advent Capital Vice President
Kevin zhao reporter&#39;s interview explained .
Origin huge loss
AIG said in a news conference, as much as 61.7 billion U.S. dollars in losses, mainly
due to &quot;a further deterioration in credit markets, particularly real estate
securitization market, according to charge (MBS) in the fall, and the result of business
In AIG&#39;s financial statements, using obscure financial term describing a
very complex net loss of 61.7 billion U.S. dollars caused by a variety of reasons.
But the main reason there is only one, that is, according to charges and real estate
securitization market (MBS) market is closely related to the overall collapse.