AIG (AIG) Scrambles To Sell Assets, Raise More Capital
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According to reports from the Wall Street Journal, American International Group (NYSE: AIG), facing problematic credit downgrades, is developing a survival plan that could include selling some of its most valuable assets, raising more capital and asking the Federal Reserve for help.
The reports said AIG turned down a capital infusion from a group of private-equity firms because it would have effectively given them control of the company.
AIG is looking to sell its domestic automotive business, its annuities unit, and has also looked into selling its aircraft-leasing arm, International Lease Finance Corp. AIG is also looking to raise another $10 billion in fresh capital, although it isn't clear how it would be structured. All the initiatives could bring $40-$50 billion to plug holes in AIG'S balance sheet.
In a rare move, AIG reached out to the Federal Reserve for help, but it wasn't clear what, if anything, the Fed could do. The Fed normally deals with Banks and Brokers.
New York insurance superintendent, Eric Dinallo, took a significant role in the talks over the weekend.
Following Friday's 31% drop in AIG stock, Standard & Poor's Ratings Services placed its ratings on AIG and subsidiaries on CreditWatch with negative implications. Standard & Poor cited the significant decline in AIG's share price and an increase in credit spreads on the company's debt. The firm said, "We believe that AIG has sufficient capital and liquidity to meet its policy obligations and potential collateral requirements, which are significantly greater than the expected cash losses on the mortgage-related assets. However, additional market value losses will place some strain on the company's resources." They also said they believe AIG's potential access to the capital market may be more restricted in the short term.
The reports said AIG turned down a capital infusion from a group of private-equity firms because it would have effectively given them control of the company.
AIG is looking to sell its domestic automotive business, its annuities unit, and has also looked into selling its aircraft-leasing arm, International Lease Finance Corp. AIG is also looking to raise another $10 billion in fresh capital, although it isn't clear how it would be structured. All the initiatives could bring $40-$50 billion to plug holes in AIG'S balance sheet.
In a rare move, AIG reached out to the Federal Reserve for help, but it wasn't clear what, if anything, the Fed could do. The Fed normally deals with Banks and Brokers.
New York insurance superintendent, Eric Dinallo, took a significant role in the talks over the weekend.
Following Friday's 31% drop in AIG stock, Standard & Poor's Ratings Services placed its ratings on AIG and subsidiaries on CreditWatch with negative implications. Standard & Poor cited the significant decline in AIG's share price and an increase in credit spreads on the company's debt. The firm said, "We believe that AIG has sufficient capital and liquidity to meet its policy obligations and potential collateral requirements, which are significantly greater than the expected cash losses on the mortgage-related assets. However, additional market value losses will place some strain on the company's resources." They also said they believe AIG's potential access to the capital market may be more restricted in the short term.
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