AIG Chair: Policyholders Should Feel Secure
AIG chairman and chief executive Ed Liddy, who just finished an interview on CNBC, said AIG's insurance business is "very strong," and that the troubled areas of the company have been "ring-fenced off."
This morning, the government announced an additional $40 billion investment into the troubled insurance giant, partially nationalizing the company by buying preferred stock. The program is similar to the government buy-in to financial institutions announced last month.
Speaking at a "TARP conference" in New York today -- a gathering of persons interested in the government's Troubled Asset Relief Program -- bailout manager Neel Kashkari said the additional help given to AIG was necessary to prevent wider damage to the economy.
Liddy said that "95 percent of the losses" at AIG caused by the toxic credit-swap assets have been isolated from what he characterized as a healthy insurance business. Hence, the "ringed-fence" characterization.
"In an almost perverse way," Liddy said, "we're as strong as anyone out there," thanks to the government bailout.
Liddy said the company is on track to sell some assets during the fourth quarter of this year to raise money and hopes to avoid laying off any of its 120,000 worldwide employees, "but I'm not sure that's going to be possible."
AIG prompted widespread taxpayer and lawmaker outrage in October when it was revealed that several AIG contractors went on a company-paid trip to an expensive spa days after AIG received its first government bailout, running up a $440,000 tab.
-- Frank Ahrens
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Posted by: macebruce | November 10, 2008 10:52 AM | Report abuse
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