AIG sells Personal Auto Unit to Zurich Financial
April 16, 2009 by Greg Michalowski · Leave a Comment
This is leading to higher stocks on the news and improved sentiment. The idea is that there is private buyers at the right price. This goes for AIG and for all companies for that matter - at least for now.
This of course has moved the EURUSD back up as when stocks improve, the flight to quality bid in the dollar disappears and this benefits the EURUSD. So although the downside was thought to be the way just a short time ago, the momentum is waning as we speak. Watching the 1.3172 100 day MA level ONCE AGAIN.
UGH!
The Wall Street Journal Comments on AIG
February 24, 2009 by Danish FX · Leave a Comment
- Under the plan, the government loan of up to $60B would be repaid with a combination of debt, equity, cash and operating businesses, such as stakes in AIG’s Asian life-insurance unit.
- WSJ adds that AIG and the government have been discussing the changes since Dec and plan to announce them by Monday when the company is expected to report its earnings.
- Under the new structure, AIG’s interest burden on the government money would be reduced.
- AIG currently pays 3% plus Libor.
- AIG also pay a 10% annual dividend on a separate $40B investment by the government.
- The plan may entail AIG continuing to try to sell some assets, but other assets would be transferred to the government in lieu of cash repayment.
- The assets would likely be spun off and may be taken public with the government owning a major stake.
- According to a person close to AIG, the government’s stake in the company is currently about 80% and is unlikely to be substantially changed in the near term.
- One of the restructuring plan’s central goals is to safeguard AIG’s credit rating, which, if cut, would force the company to make billions of dollars in payments to its trading partners.
- The new plan is being structured in close consultation with the major credit-rating agencies.
- WSJ notes that the talks with the government are ongoing and while they are at an advanced stage the deal may still fall apart or change significantly.
- One major sticking point is how to value the assets.
- Says AIG’s total loss for Q4 is likely to top $60B.
- WSJ says inside the Fed, officials have been worried about AIG’s Q4 loss and about the risk that the company will have its credit rating cut.
CNBC reports AIG needs additional funds to cover a $60 B loss
February 23, 2009 by Greg Michalowski · Leave a Comment
AIG, the huge insurance and financial instituion is said to be asking the US government for further capital. The firm has already gotten 150 Billion in a bailout plan. They would need more as it is reported that they expect to report a 60 billion dollar loss next week. A loss of this size would likely lead to credit downgrade and possible bankruptcy. This is unlikely given the amount of funds already used to keep it alive. The problem with AIG is its tentacles extend a long way. Banks, insurance companies, hedge funds, etc all have exposure and unraveling the web from its dealings would be catostrophic to the financial industry.
This should not be good news for equities. It should also be a problem for other industries who are looking for handouts (like autos). With regard to currencies, I would think Yen crosses /dollar might be pressured as well. So far, the response is minimal, however.
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