AIG posted its 2009Q1 $4.35 billion loss, its 6th consecutive quarterly loss. Compared to its 2008 Q4 loss of $61.7 billion, its 2009 Q1 performance was able to reduce its losses. On an adjusted basis, the loss was $1.6 billion, less than its year ago adjusted loss of $3.56 billion.
AIG is in talks with the Fed about new methods of solving their financial difficulties. CNBC reported that AIG is expected to report a loss as big as $60 billion on Monday.
Investors expressed concerns that AIG may need further government aid in addition to the $152.5 billion they have already received.
AIG owes a total of $10 billion to several firms on Wall Street due to failed speculation on mortgage and corporate debt.
AIG reported a 3Q loss of $24.5 billion (-$9.05/share) and announced that it is selling an additional $40 billion of preferred stock to the US Treasury under the TARP program.
AIG borrowed an additional $37.8 billion from Federal Reserve Bank of New York by accessing a credit facility. This debt is secured on AIG's part with mortgage-backed assets.
AIG's stock fell over 30% after S&P put the company's debt on creditwatch-negative. The cost of insuring AIG debt in the credit default swap market has reached an all time high. To insure $10 million, it costs a total of $1.7 million. If AIG's debt is downgraded again, it will be forced to raise another $10 billion in capital. The company plans to announce its new strategy by September 25.
AIG fell on fears that its large exposure to the mortgage markets could force the company to raise fresh capital.
As the firm has now racked up over $20 billion in write downs stemming from credit derivatives, the SEC and Justice Department are investigating the possible overstating of the value of these securities over the past two years.
Moody's has downgraded AIG's senior unsecured debt to Aa3 (equivalent to AA-). Moody's noted that AIG has now lost over $18bn in tier 3 asset investment (cds, cdo, etc).
On 8 May 2008, AIG reported a disastrous quarterly result. Among the wreckage was over $9bn in writedowns for credit derivatives. The company announced that it would need to raise $12.5bn in capital.
On February 29, 2008, AIG announced it fourth-quarter and full-year 2007 results. The firm lost $5.29 billion in the fourth quarter, dragging yearly profits down to $6.2 billion from $14 billion in 2006. Net revenue also declined from $113 billion to $110 billion. Write-downs of around $11 billion were largely responsible for the losses.
AIG announced that auditors had found "a material problem" with the way the company valued credit default swaps and reported them in their earnings statements. This raised fears of further losses at AIG, sending the stock price down 9.4% during the day.
Substantial write-downs of its investment holdings and a $216 million loss at its mortgage insurance division helped push quarterly profits at the world's largest insurer down 27% from 2006. AIG's stock fell 6.7% in the day's trading.
In the days preceding AIG's third-quarter earnings release, a Goldman Sachs analyst reiterated his "Buy" rating on AIG and emphasized a target price of $87. According to the analyst, Thomas Cholnoky, investors have overestimated AIG's potential write-downs from subprime exposure in the wake of large devaluations at Merrill Lynch and Citigroup, among others. His opinion helped buoy AIG's stock price in the days leading up to the earnings release.
Just before the company's third-quarter earnings release on November 7, news of additional write-downs at Citibank and continued reports of the impact of the subprime fallout on mortgage insurers drove AIG's stock price down sharply. As a result of its size, AIG has relatively more exposure to subprime-backed securities than other insurers.
Investors were concerned the subprime collapse could hurt the value of AIG's invested assets. AIG had $814 billion in cash and invested assets at the end of the first quarter, with about 3.6 percent in subprime residential mortgage-backed securities.
AIG initiated a lawsuit against former CEO Maurice Greenberg and former CFO Howard Smith, seeking more than $1 billion in damages. AIG claimed that the two executives caused violations of the federal securities laws and potential criminal liability, as well as the company’s continuing legal costs, estimated at nearly $1 billion. Greenberg’s company, C.V. Starr & Co., filed a suit against AIG seeking hundreds of millions of dollars in damages for illegal monetary transactions while Greenberg was head of both corporations.
AIG entered the bidding for Bulgarian Telecommunications Co., a company worth €1.7 billion to €1.9 billion. The insurer also took a significant minority equity stake in The REX Group, a group of San Francisco-based home finance companies. The strategic investment reveals AIG’s commitment to develop U.S. residential real estate equity as a new asset class. AIG also announced the sale of its 50% beneficial ownership interest in Northern Star Generation, LLC to UBS for an undisclosed amount, in a deal expected to close in the third quarter of 2007.
AIG expanded its existing share repurchase program by authorizing the repurchase of $8 billion in common stock during 2007. The repurchases will be funded using AIG’s capital resources along with future issuances of junior subordinated securities that qualify as hybrid securities for rating agency capital treatment. The company also announced a new dividend policy, which provides plans to increase AIG’s common stock dividend by 20% annually, effective May 2007.
AIG completed several key transactions during this time period. It completed its acquisition of 100% of the common shares of Central Insurance Co, LTD, a general insurance company in Taiwan. Also, along with Credit Suisse Group and General Electric Co, AIG acquired the London City Airport for a price close to £750 million ($1.39 billion). AIG owns 50% of the airport’s equity.
