AIG reports record $61.7bn loss

[Bhaisahab]

Source: BBC

Insurance giant AIG has reported a loss of $61.7bn (£43bn) in the final three months of 2008 - the largest quarterly loss in corporate history.

And the firm will receive an extra $30bn from the US government as part of a revamped rescue package.

AIG has already received $150bn in financial support - the biggest bail-out by far of any US company.

Stock markets slid sharply as AIG's plight underscored fears about the health of the global financial system.

The Federal Reserve and the Treasury said that AIG posed a "system risk" to the global financial system.

"The potential cost to the economy and the taxpayer of government inaction would be extremely high," they said.

Read more: http://news.bbc.co.uk/2/hi/business/7918643.stm

[annabanana]

1. How. .exactly. . does an insurance company lose money?

What claims are they paying out at such a huge rate? Was their customer base not broad enough? I really don't understand how stupid an insurance company has to BE to lose money like that...

[RUMMYisFROSTED]

4. They insured the default swaps that are taking down Wall St.

At a potential cost of trillions.

[MilesColtrane]

13. They ceased being just an insurance company after the Glass-Steagall act was dismantled.

AIG runs the shipping operations at these ports in the United States.

Seattle
Tacoma
Portland
Vancouver
Benicia
Sacramento
Concord
Stockton
Richmond
Oakland
Port Hueneme
Los Angeles
Long Beach
San Diego
Corpus Christi
Freeport
Galveston
Port Arthur
Houston
Beaumont
Baton Rouge
New Orleans
Gulfport
Tampa
Miami
Port Canaveral
Jacksonville
Brunswick
Savannah
Charleston
Sunny Point
Wilmington (N.C.)
Nortfolk
Baltimore
Wilmington (DE)
Camden
Jersey City
Philadelphia
New York
Newark
Davisville
Providence
Boston
Portland (MN)

So you see, if AIG were allowed to fail, trade between the U.S. and the rest of the world would come to a virtual standstill until a buyer could be found for the division that runs the ports.

The Gramm-Leach act MUST be repealed as any part of a fix to this mess.

[Festivito]

14. They have several branches, insulated from each other.

Their general insurance side is still profits.

A lot of their operation is in the toilet.

[global1]

2. Can Somebody Tell Me How A Company Could Lose So Much Money In ........

3 months? Wouldn't the accounting/investment people see the signs and do something to stave off such losses?

[alcibiades_mystery]

10. You can't stave off insurance contracts that precede the disaster

These losses stem from promises to backstop various mortgage backed securities. As soon as lehman went down, the contracts started being called. AIG kept no cash reserves for this type of insurance (as they are required to keep for other insurance contracts), since credit default swaps were unregulated. They were basically selling their positive credit rating for fees, thinking that the insurance contracts themselves would never possibly be called. Ooops.

[MannyGoldstein]

3. Rather, They Reported That *We* Lost 61.7 B

They, on the other hand, are laughing at us so hard that they need to change underwear.

[SahaleArm]

5. Laughing all the way to the bank

AIG on life support with the Treasury/Fed pumping billions at the behest of the private bankers which just happen to be AIG's largest counter party. A money pit with a limitless appetite.

[RedCloud]

6. They jacked up my car insurance rates by 225%

This was after they got their sympathy money.

So I ditched them!

[sarcasmo]

7. Why the FUCK are we giving them more money?

[acmavm]

8. Thank God these incompetents are still getting their bonuses.

I mean, it's apparently the NEW Amurikan way. The more you lose, the more you get.

[brentspeak]

9. Why hasn't this firm been completely nationalized yet?

[Renew Deal]

11. So when does AIG get broken apart?

Is the risk going to be dealt with?

[DS1]

12. Fire everyone making over 200k at AIG