A Question for A.I.G.: Where Did the Cash Go?

[groovedaddy]

The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting.

“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.

Mr. Vickrey says he believes A.I.G. must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse and received an $85 billion emergency line of credit by the Fed. That loan was later supplemented by a $38 billion lending facility.

But losses on that scale do not show up in the company’s financial filings. Instead, A.I.G. replenished its capital by issuing $20 billion in stock and debt in May and reassured investors that it had an ample cushion. It also said that it was making its accounting more precise.

http://www.nytimes.com/2008/10/30/business/30aig.html?th&emc=th

[enid602]

1. bonuses

Bonuses for management, no doubt.

[Dover]

2. AIG's Painful Sell-Off Reaches The Philippines

The largest lender in the Philippines, Metropolitan Bank & Trust (Metrobank), has become the latest big-name to enter the race for the overseas assets of the beleaguered US giant American Insurance Group (AIG). On October 23, Metrobank confirmed that it wants to acquire AIG's local subsidiary, Philippine American Life and General Insurance (Philiamlife). The company is the largest insurer in the Philippines, and will be one of AIG's most prized operations in the region with around US$3.4bn in assets and a net worth of US$1bn at the end of 2007. In Philiamlife, Metrobank sees a good strategic fit with its existing operations in the area, notably Philippine AXA Life, its life insurance joint venture with French giant AXA Group, and insurance firm Philippine Charter Insurance.


Metrobank Vice-Chairman Antonio Abacan confirmed that 'Philamlife's businesses fit the operations of the respective companies in our groups. They are very strong and well-managed corporations, and a successful acquisition of these companies would accelerate the growth of the Metrobank group in these areas.' In addition, Metrobank's thrift banking subsidiary Philippine Savings Bank (PSBank) would also look to buy Philam Savings Bank, while its credit card division, Metrobank Card Corporation, would be interested in Philiam's own credit card divisions...cont'd

http://www.corporatefinancingweek.com/file/70419/aigs-painful-sell-off-reaches-the-philippines.html
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[Dover]

3. Despite $143 Billion Bailout, AIG May Be Tottering Towards Collapse

Despite a $143 billion federal rescue effort, American International Group seems to be tottering towards collapse. The giant insurer is quickly running through Federal Reserve lending and key executives are jumping ship, leaving some experts to wonder if bankruptcy might have been a better alternative.

Claiming to be solvent in September, AIG has been spending nearly $123 billion of the emergency Federal Reserve lending made available in September and October to keep the firm from going under.

The money was part of a total of $143 billion in loan money given by the federal government to assuage fears that AIG was so large and intertwined with the financial community that its failure would have a disastrous domino effect.

..snip..

Burning so much money so fast has raised suspicions that AIG had already incurred billions of dollars in losses when the federal government extended it the $85 billion emergency line of credit. According to media accounts, AIG has not provided details of how it has spent the money. Complicating matters is that many of AIG.’s liabilities are in complicated and hard to value derivatives..

..snip..

The company’s predicament has led analysts to wonder if going bankrupt instead of receiving a bailout might have provided more structure and protected taxpayers better. There are suspicions that AIG’s bankruptcy might not have caused the massive aftershock that was predicted and used as an excuse for the bailout.

cont'd


http://industry.bnet.com/financial-services/1000177/despite-143-billion-bailout-aig-may-be-tottering-towards-collapse/?tag=main;content

[SweetStephanie]

4. pocket money

into my pocket