Saving A Not So I, Not So G

The Dow dropped below 7,000 this morning. Let’s thanks AIG (AIG) for delivering a quarterly loss of $61.7 billion. That’s the largest loss in the history of the world. To add some perspective, that’s a loss of nearly $23 a share for a stock that’s bouncing around 50 cents a share.

In the quarter, A.I.G. took a $21 billion charge related to taxes and wrote down $25.9 billion in assets, including mortgage-back securities and credit-default swaps.
The company’s general insurance business lost $2.8 billion compared with a profit of $2.1 billion in the quarter a year ago. Premiums dropped 16.3 percent to $9.2 billion and earnings from premiums fell 5.9 percent to $10.98 billion.

The government is injecting more cash into the floundering insurance giant. This is the fourth time the Feds have come to the rescue. Uncle Sam currently owns 80% of AIG. The move was specifically designed so the credit agencies wouldn’t downgrade AIG, which would hurt the company even more.
Larry Ribstein writes: “The government is bailing out AIG because AIG undermined a system that the government was supposed to be, but wasn’t, protecting. And now who’s in charge? The government, of course.”

Posted by on March 2nd, 2009 at 10:15 am


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