The world's largest insurer is looking at "options" after it's stock fell 45 percent in a week's time, and even 18 percent in one day. AIG has netted losses of about $18,000,000,000 over the last three quarters, linking its problems to credit default swaps tied to the present crisis in the subprime mortgage market.
Robert Wilumstad, who took over as AIG's cheif executive in June, has implied that he is willing to shed some of the company's less profitable ventures, stating "We are conducting a comprehensive review of all AIG's businesses with the objectives of improving results, reducing AIG's risk profile and protecting our capital base."
The good news for AIG insurance customers is that this downturn has not affected the quality of the AIG insurance franchise. The bad news, however, is that this is obviously not over. After raising $20 billion dollars two months ago, analysts say it still may not be enough for the financial giant to recover its loss. AIG is also reportedly seeking $40 billion dollars in emergency funds to help the company avoid a credit rating downgrade, which would make it EVEN HARDER for the company to raise money. The problems don't seem to be ceasing soon, as investors are becoming increasingly fearful of bailing out tumbling high-dollar stocks.
The bigger effect on the economy and the unemployment rate seems imminent, as the situation can be summed up by chief executive Wilumstead's words from about a month ago, "a less complex AIG would be a better competitor." What will happen remains to be seen, an announcement is expected later in September.
This article was written by Julian Floyd. For risk-free no-obligation insurance quotes, visit http://www.thebestonlineinsurance.com |
