American International Group, Inc. (AIG)

[Teamlasvegas]

.39 @ .39

Shares Of AIG Slump On 4Q Loss Fears
68 minutes ago - Dow Jones News

Related Companies
Symbol Last %Chg
AIG 0.39 -26.42%

As of 12:00 PM ET 2/24/09

By Lavonne Kuykendall
Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--Reports that American International Group Inc.'s (AIG) fourth-quarter loss could reach $60 billion and the company's reported efforts to rework its government rescue package forced down the company's battered shares as investors worried about potential dilution of their own stakes.
According to the Wall Street Journal, AIG executives are seeking an overhaul of the company's $150 billion government bailout package, a move that would substantially reduce the insurer's financial burden. The Journal, as well as cable network CNBC, are reporting the insurer's fourth-quarter losses could grow to around $60 billion.
Shares of AIG dropped nearly 25%, to 40 cents, in recent trading on the concern that any government bailout will dilute shareholders even further.
"We continue to work with the Federal Reserve Bank of New York to evaluate potential new alternatives for addressing AIG's financial challenges," company spokesman Christina Pretto said late Monday afternoon. "We will provide a complete update when we report financial results in the near future."
Through the first three quarters of 2008, AIG reported a net loss of $37.6 billion, driven by skyrocketing losses in its portfolio of credit default swap contracts written on securities backed by residential mortgages, as well as growing losses on other investments.
Further losses could come on residential and commercial mortgage-backed securities it holds in its investment portfolio or from its portfolio of credit default swaps written on securities issued by other banks.
Some of AIG's business subsidiaries are likely to be feeling the pain from AIG's weakened borrowing position.
In its third quarter earnings filing with the Securities and Exchange Commission, AIG pointed to a variety of problems that could come from further credit rating downgrades, including increased collateral calls or termination payments and increased borrowing costs.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750 4141; [e-mail]

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/nae/al?rnd=IopGeH4wwr6oU0nP2llg3Q%3D%3D. You can use this link on the day this article is published and the following day.


(END) Dow Jones Newswires
02-24-09 1052ET
Copyright (c) 2009 Dow Jones & Company, Inc.