AIG plans $20 billion asset sell-off to shore up capital

September 14, 2008 by · Leave a Comment
Filed under: Industry News 

The most interesting piece of this article was the mention at the bottom that stated AIG has lost $18 billion in the last 3 quarters from the next boot to drop, credit-default swaps or CDS.

This is just another sign that the unregulated credit-default swap market is the real lurking dragon on the market and all of these aggressive actions to keep companies from going bust with a lot of these CDS on their balance sheet making them go default and then you would have a situation where many of these CDS dealers could not have the capital to pay the counter-party.

Article:

American International Group (AIG), the world’s biggest insurer, is planning a $20 billion asset sell-off as it fights to correct a slump in its shares and braces for the impact of Hurricane Ike, the Sunday Times said.  The newspaper, without citing sources, said details of the plan could come as early as Monday.

It said assets under the hammer included Transatlantic Holdings, AIG’s New York-listed reinsurance group, and that Europe’s Swiss Re were potential buyers.

AIG and Swiss Re could not immediately be reached for comment. Munich Re declined to comment.

A source familiar with developments told Reuters on Friday that AIG could announce details of its turnaround plan much sooner than expected, including possible asset sales and how it will shore up capital.

The Wall Street Journal reported on Friday that AIG could hold an investor call as early as Monday, and business news channel CNBC said the insurer had hired JPMorgan to advise it on raising fresh capital.

AIG has been hit hard by the global credit crunch and its shares plunged as much as 34.5 percent on Friday, stepping up the pressure for quick action.

A portfolio of credit default swaps AIG wrote to guarantee securities linked to subprime mortgages has triggered cumulative losses of $18 billion over the past 3 quarters.

Source: Reuters

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