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AIG Plans Major Restructuring
We reported yesterday that American International Group planned to announce the sale of $20 billion of assets on Monday to shore up its balance sheet and hopefully its stock price. We noted that even that large a set of disposals might not prove sufficient, since rating agencies appear to want the world's largest insurer to raise $30 to $40 billion to avoid a major downgrade.
Today's story in the Wall Street Journal is broadly similar to the piece in the UK Times that we discussed yesterday, but troublingly, the dollar amount that these efforts are reported to raise is $10 billion, half from the $20 billion reported yesterday. Is this due to some assets being pulled back from disposition more realistic pricing, or the Times simply getting some bad information? From the Journal:
American International Group Inc. plans to disclose a comprehensive restructuring by early Monday morning that is likely to include the disposal of major assets including its aircraft-leasing business and other holdings, according to people familiar with the matter.
AIG's management team was scrambling on Sunday afternoon to cobble together the plan and present it to the insurer's board for approval, the people said. The insurer, which has already raised $20 billion in fresh capital so far this year, was also in discussions with several private equity firms about a capital injection and hoped to raise more than $10 billion, the people said.
AIG considered selling or spinning off the aircraft-leasing arm -- International Lease Finance Corp. -- earlier this year but decided in June to keep it. ...In addition to ILFC, AIG was considering selling other parts of its business, including assets related to property and casualty insurance...
As recently as Thursday, AIG, the U.S.'s largest insurer, said it was sticking to a schedule to unveil its strategic plan on September 25. But the precipitous drop in its shares, which have fallen 79% so far this year, forced the insurer to act quickly.
Late Friday, Standard & Poor's warned that it could cut AIG's credit rating by one to three notches amid concerns that AIG will have difficulty accessing capital in the short term.
http://www.nakedcapitalism.com/
We reported yesterday that American International Group planned to announce the sale of $20 billion of assets on Monday to shore up its balance sheet and hopefully its stock price. We noted that even that large a set of disposals might not prove sufficient, since rating agencies appear to want the world's largest insurer to raise $30 to $40 billion to avoid a major downgrade.
Today's story in the Wall Street Journal is broadly similar to the piece in the UK Times that we discussed yesterday, but troublingly, the dollar amount that these efforts are reported to raise is $10 billion, half from the $20 billion reported yesterday. Is this due to some assets being pulled back from disposition more realistic pricing, or the Times simply getting some bad information? From the Journal:
American International Group Inc. plans to disclose a comprehensive restructuring by early Monday morning that is likely to include the disposal of major assets including its aircraft-leasing business and other holdings, according to people familiar with the matter.
AIG's management team was scrambling on Sunday afternoon to cobble together the plan and present it to the insurer's board for approval, the people said. The insurer, which has already raised $20 billion in fresh capital so far this year, was also in discussions with several private equity firms about a capital injection and hoped to raise more than $10 billion, the people said.
AIG considered selling or spinning off the aircraft-leasing arm -- International Lease Finance Corp. -- earlier this year but decided in June to keep it. ...In addition to ILFC, AIG was considering selling other parts of its business, including assets related to property and casualty insurance...
As recently as Thursday, AIG, the U.S.'s largest insurer, said it was sticking to a schedule to unveil its strategic plan on September 25. But the precipitous drop in its shares, which have fallen 79% so far this year, forced the insurer to act quickly.
Late Friday, Standard & Poor's warned that it could cut AIG's credit rating by one to three notches amid concerns that AIG will have difficulty accessing capital in the short term.
http://www.nakedcapitalism.com/
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