AIG facing liquidity crisis!

[Zeus]

AIG, facing liquidity crisis, seeks Fed lifeline


By Lilla Zuill
Reuters
First Posted 11:38:00 09/15/2008


NEW YORK, United States -- Insurer American International Group Inc., working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking $40 billion in short-term financing, the New York Times said.
Chief executive Robert Willumstad reached out to the Fed late on Sunday, according to reports in the Times, the Wall Street Journal and business news channel CNBC.
AIG's scramble to secure a Fed lifeline came late into one of the worst-ever days on Wall Street, with Lehman Bros on the verge of collapse, and Bank of America moving to take over Merrill Lynch & Co.
The Fed normally oversees monetary policy and supervision of banks, but CNBC said AIG was seeking the funds as a temporary measure and planned to repay the Fed with the proceeds from asset sales.
Rating agencies have threatened to downgrade AIG's ratings by Monday morning, said the New York Times.
AIG officials did not immediately respond to requests for comment.
The company, until recently the world's biggest insurer by market capitalization, has been attempting to hammer out an emergency strategic plan after its shares fell nearly 50 percent last week on fears it faced a liquidity crisis.
AIG has been negotiating with various parties including officials from the New York Insurance Department and private equity firms as it seeks ways to free up capital, raise new capital and protect policyholders.
Regulators including New York insurance superintendent Eric Dinallo have been holed up at AIG's New York offices over the past two days trying to hammer out a plan.
"We are working to craft a solution to protect the company and policyholders," said a person from the New York Insurance Department, who asked not to be named.
Former AIG chief executive officer Maurice "Hank" Greenberg, who ran the company for nearly four decades, was not involved in any of the discussions, said his spokesman, Glen Rochkind.
"He repeatedly offered to assist in any way he could," added Rochkind.
CASH CRUNCH
AIG, hit by $18 billion in losses over the past three quarters from guarantees it wrote on mortgage derivatives, has had to act quickly after Standard & Poor's said on Friday it may downgrade AIG's ratings.
Ratings downgrades could force AIG to post up to $14.5 billion more in collateral, according to a regulatory filing last month.
Downgrades could also be detrimental to AIG's insurance business, since some policies carry clauses that nullify a contract in the event of downgrades below a certain level.
Over the weekend, the insurer has been working on a three-part plan involving asset sales, shifting regulated capital from the insurance operations to the holding company, and working with private equity investors, said a person familiar with the negotiations.
The New York Times said AIG's plans to shift capital had to be put on ice because of the time and complexity involved, and that private equity firms withdrew interest over the company's precarious financial health.
Parties in capital-raising talks with AIG included buyout firms Kohlberg Kravis Roberts & Co. and J.C. Flowers & Co., another person familiar with the talks said.
An AIG spokesman earlier confirmed the company was evaluating a wide range of options, including asset sales.
Media reports have said that one of the companies on the block was AIG's highly profitable aircraft leasing arm, but the spokesman declined to confirm this was the case.
In late June, AIG said the unit, International Lease Finance Corp., would remain part of AIG.
AIG was founded in China 89 years ago. In the years since, largely under Greenberg's watch, it grew into one of the world's largest insurers, spanning 130 countries and territories and serving 74 million customers.
Greenberg stepped down in 2005, in the midst of an accounting scandal. His successor, Martin Sullivan, was replaced by Willumstad in June after investors grew disgruntled over its three quarters of losses.
Greenberg owns or controls about 12 percent of AIG's stock, making him the largest shareholder.

Source:www.inquirer.net
Sept.15, 2008

[uls]

Galing kasi ng AIG...

Not only did they invest in mortgage-backed securities (dyan napunta ang mga insurance premiums ng AIG customers)...

they sold insurance protecting mortgage-backed securities against default. (syempre, insurance company ang AIG, they sell insurance hehe)

Now that those mortgage-backed securities are toilet paper, AIG saw a lot of its assets evaporate...

And since they insure against defaults, they have to pay out a lot of money coz those securities are defaulting all over the place.

kaya eto ang AIG ngayon... kulang sa pera...

naglilimos... nagbebenta ng ari-arian...

ano kaya effect nito sa Philam Insurance?

hmmmm

[tidus1203]

The funny thing is everyone rided the bubble but none of then was smart enough to realize its a bubble.

[creepy]

I think many people knew it was a bubble. But too many people though they were smart enough (or lucky enough) to get out before the bubble burst.

[baludoy]

ano nga ba effeect nito sa may placements sa mutual funds ng philamlife?

[CVT]

Am interested in this question since I have some money there. Any expert advise here, please? (My thinking is that these are placed in the local market, so should be okay???)

6707:choir:

[CVT]

Am interested in this question since I have some money there. Any expert advise here, please? (My thinking is that these are placed in the local market, so should be okay???)

6707:choir:

[tidus1203]

I would get out of AIG/Philamlife para sigurado. While my guts tell me this one could be bailed out unlike Lehman since its one of those so-called "TO BIG TO FAIL" but you never know its better to be safe than sorry. Lipat nyo sa mga local insurers like BPI or BDO (wag Yuchengco I don't trust those guys). Or kung gusto nyo foreign ok din yung Sunlife or Manulife.

[uls]

update:

Rating agencies downgrade AIG

Moody's Investors Service cut AIG's rating to A2 from Aa3, a two-notch downgrade. Standard & Poor's Ratings Services lowered the rating to A-minus from AA-minus, a three-peg reduction and Fitch Ratings reduced its standing to A from AA-minus, a two notch cut.

Now who the hell would wanna buy insurance from a company with less than AAA rating?

AIG is so screwed.

[Zeus]

ano nga ba effeect nito sa may placements sa mutual funds ng philamlife?

Ito ang sabi ng Philam

Philam mutual fund company says fund are safe


By Ma. Salve Duplito
INQUIRER.net
First Posted 10:57:00 09/16/2008



MANILA, PHILIPPINES—The Philam Asset Management Inc. (PAMI) said Tuesday investments in the mutual fund companies under its wings are safe and will not be affected by troubles facing American International Group (AIG), the company’s parent company.
Karen Liza M. Roa told INQUIRER.net in a telephone interview that under Philippine laws, mutual fund companies are legal entities of their own and are required to get third-party custodians to handle the funds.
“Yes, your investments are safe…It’s not the funds that are in trouble, it’s the fund manager’s parent company. We should all be very clear on that,” she said.
This means that should AIG close its doors under a worst-case scenario, PAMI may close shop but the fund itself will merely get a new fund manager.
PAMI is the second-biggest mutual fund management company in the Philippines, with around P19 billion assets under management.
“(Investments in PAMI-managed mutual funds) are not co-mingled with ours,” Roa said.
Under Philippine laws, mutual fund companies have separate and independent members in the board of directors and are required to follow the investment restrictions of the Securities and Exchange Commission and the Philippine Investment Company Act. This includes the obligation to buy back any shares that its investors want to redeem.
“If you take a look at your investments, they are in Philippine blue chips and in Philippine prime grade fixed income. Citibank is our third-party custodian,” Roa said.
AIG, one of the biggest insurance companies in the world, is the latest financial services company battered by the turmoil in the US housing and credit markets.

Source:www.inquirer.net
Sept.16, 2008

Pero sa tingin ko suguradong marami ang magwwithdraw ng investment sa Philam