Monday, 2 March 2009

AIG Insurance reports record $61.7bn loss

The Amercian Insurance giant AIG (American International Group) has reported a loss of $61.7bn (£43bn) in the final three months of 2008 - the largest quarterly loss in corporate history. AIG has already received $150bn in financial support - the biggest bail-out by far of any US company.

The fourth quarter 2008 adjusted net loss, was $37.9 billion or $14.17 per diluted share, compared to an adjusted net loss of $3.2 billion or $1.25 per diluted share for the fourth quarter of 2007.

The company will receive an extra $30bn from the US government as part of a revamped rescue package. Under the deal, the third government rescue of AIG since September, the US Treasury and the Federal Reserve will provide around $30bn in fresh capital to the insurer, lower the interest rate on a $60bn-loan and ease the terms of a $40bn preferred share investmentUS officials fear that a failure of AIG would be disastrous for both the US and the global economy.

The latest package involves the Federal Reserve taking stakes in its American Life Insurance and American International Assurance businesses.

According to a report in the Insurance Times, the group is also separating out AIG UK, a general insurance business, by creating a new holding company to be called AIU Holdings.The establishment of AIU Holdings, Inc. will assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions.

“AIG is executing one of the most extensive corporate restructuring programs in history,” said Edward Liddy, Chairman and Chief Executive Officer, AIG. “The formation of AIU Holdings, Inc. will help protect and enhance the value of these key businesses, and position them for the future as more independently run, transparent companies.”

When it is formed, AIU Holdings, Inc. will be a unique leading franchise with more than 44,000 employees and 500 products and services serving 40 million commercial and individual customers in 130 countries and jurisdictions.

AIG UK Limited who are part of the American International Group, Inc., (AIG) are underwriters to insurance4carhire products and Direct Travel Insurance are underwritten by AIG UK Limited. Both of these products are available via who are introducers for and Direct Travel Insurance.

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