Posts Tagged ‘AIG’

AIG Repays $6.9 Billion More

March 8th, 2011 by Iris | Comments Off | Filed in insurance facts, insurance news, insurance specialists

It’s been a while since we wrote about AIG, but Reuters is reporting today that American International Group has returned another $6.9 billion of it’s bailout money to the U.S. Treasury, which means that 70% of the original $411 billion under the TARP plan (Troubled Asset Relief Program) has now been recovered.

According to spokespeople for AIG, $6.6 billion of the latest repayment came from selling its shares in the insurance company MetLife – shares that were initially acquired when it sold its international unit Alico to MetLife last year. Another $300 million was leftover from expenses related to the Alico transaction.

After this most recent payment, the U.S. Treasure still retains about $11.3 billion in preferred interests in AIG, as well as roughly 92% of the insurance group’s common stock. If that stock were to be sold at today’s closing price, it would generate almost $14.22 billion.

Spokespeople for the Treasure Department expect that every dollar of AIG’s bailout – which was $182 billion at its highest point – will eventually be recovered.

As of this evening, about 70% of the still-outstanding TARP funds are from AIG, Ally Financial, and General Motors.

Tags: , , ,

IPO for AIG’s AIA?

July 13th, 2010 by Iris | Comments Off | Filed in insurance news, life insurance

There may be an IPO for AIG’s AIA.

If that seems like so much alphabet soup, let us explain: the board of directors of American International Group (AIG) is planning to meet later this week, in order to consider the future of one of it’s business units, and an IPO is the most likely outcome, according to a report in the Insurance Journal.

AIA, the Asian life insurance division of AIG is likely to have an IPO – that’s “initial public offering” – because it’s the most attainable option, as opposed to pursuing another acquisition offer and the attendant risks associated with potential funding issues for the buyer.

Company sources, who say that while they’re directly involved in the future of AIA, but are not authorized to make public statements, said that AIG’s board would gather in New York on Wednesday, but that as of yet, no final course has been determined for AIA.

On Tuesday, there was much attention given to the notion of AIA receiving an outside offer. The South China Morning Post reported that four Chinese groups had approached AIG and the U.S. Treasury Department not long after Britain’s Prudential had withdrawn its $35.5 billion bid for AIA last month, after it tried (and failed) for a price renegotiation.

While it’s possible that a second offer may come, the spectacular failure of Prudential to acquire AIA has taken its toll on both company, and sparked disagreements within the upper tiers of AIG’s management.

AIG chose not to comment on the Chinese offers or the likelihood of an IPO.

Tags: , ,

AIG Did Not Ignore Red Flags, Judge Says

March 31st, 2010 by Iris | Comments Off | Filed in insurance facts, insurance news, insurance specialists

Reuters reported earlier this week that a federal judge in Manhattan has dismissed a shareholder lawsuit against AIG. The suit accused both current and former American International Group, Inc., directors and executives of ignoring the “red flag” warning signs that lead to the insurers near-demise and necessitated $180 billion in Federal bailout funds.

On Tuesday, U.S. District Judge Laura Taylor Swain accepted the insurers argument that the shareholders, led by the Louisiana Municipal Employees Retirement System pension fund, were equally culpable since they failed to ask the board of directors to either take action or demonstrate the futility of doing so. Mark Herr, a spokesman for AIG, said that the New York-based company was satisfied with the 44-page long ruling.

In the ruling, the complaint, which sought remedies on behailf of AIG which included both restitution and “extraordinary” equitable relief, was labeled “derivative.” In it, AIG officials were accused of ignoring the potential for catastrophic losses due to credit default swaps, largely connected to subprime mortgage-related debt, through its AIG Financial Products division. Those losses led to the series of bailouts that gave the Federal government with an almost 80% stage in the company. Meanwhile AIG has been selling off assets to repay its debt to the government.

The complaint also alleged that the health and risk management practices of AIG had been overstated by the company, which resulted in corporate assets being wasted in many ways, which included:

  • authorization of a costly stock buyback and divident increase just prior to a liquidity crises in September, 2008
  • awarding excessive salaries to former chief executive Robert Willumstad
  • awarding excessive severance pay to Willumstad’s predecessor Martin Sullivan and former AIG Financial Products president Joseph Cassano
  • granting “lavish” retention bonuses to employees within Cassano’s unit

In addition, the complaint also said that the plaintiffs thought seeking help from the board would be useless, because “wrongdoers” dominated the board at the time, and they didn’t believe the directors would be inclined to “sue themselves” for their actions, exposing themselves to potential personal liability. Judge Swain, however, said that the shareholders were unsuccessful at demonstrating that the directors were either disinterested or independent, or that they had not properly exercised their business judgment.

A lawyer for the Louisiana fund did not return Reuter’s requests for contact. AIG shares closed down 26 cents on Tuesday on the NYSE; Swain’s decision was handed down after the U.S. Markets had closed.

Tags: , ,