AIG turned down a private offer before the government stepped in.

[girl gone mad]

According to this story, AIG might have been saved through the free markets, but they weren't happy with the offer.

Was there an expectation on the part of AIG that the government would save them (or even an assurance)? Moral hazard? I wish the media would delve into this a bit more.


Allianz, Flowers Said to Have Bid for AIG Before Fed Takeover

Sept. 17 (Bloomberg) -- Allianz SE, Europe's largest insurer, made an offer to invest in American International Group Inc. that was rejected by the U.S. insurer two days before it accepted a government takeover, said two people with knowledge of the bid.

Allianz teamed with J.C. Flowers & Co., the New York-based private equity firm run by J. Christopher Flowers, in an effort to help New York-based AIG stave off a cash crunch, according to the people who declined to be identified because the talks were private.

Sabia Schwarzer, a spokeswoman for Munich-based Allianz, declined to comment. Flowers and Nicholas Ashooh, an AIG spokesman, didn't return calls seeking comment.

AIG, the biggest U.S. insurer by assets, accepted an $85 billion loan from the government yesterday in exchange for a 79.9 percent stake. Edward Liddy, the former Allstate chief executive officer, will replace Robert Willumstad as AIG's CEO, said another person who is familiar with that situation. All three of the people spoke on condition of anonymity.

The U.S. Federal Reserve said it offered the loan because of the risk that an AIG failure would threaten the stability of world financial markets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azTRq.G2zU7g&refer=home

[BrklynLiberal]

1. Corporate welfare is ok...just don't help the homeless, the hungry or the ill.

[TahitiNut]

3. Isn't it strange how poverty "trickles down" so much faster than wealth?

:grr:

[BrklynLiberal]

5. I really like the quotes in your sig line...

:thumbsup:

[Frank Booth]

2. We've all been had.

There go more of our tax dollars down the drain.

[magellan]

4. It doesn't say how much Allianz offered

That would be interesting to know.

[jbnow]

6. This will sound dumb but how did an insurance company

get in so much trouble?

[Ikonoklast]

8. Insuring credit default on European banks

Their domestic insurance side is strong, makes money, but the bulk of their problem came from insuring European banks that bought derivatives and credit swaps based on U.S. mortgages.

The securities were worthless.

AIG was on the hook to pay off.

They are actually in a cash crunch more than anything else. The underlying insurance business has a pretty good value, but they couldn't shed assets quickly enough to raise the kind of capital they need. The airliner leasing business they own itself is worth $50 billion a year.

If they were given another four-six months or so, they just might have emerged as a still viable company, albeit a much smaller one.

[jbnow]

9. Thanks. I wondered if they were reinsurers for some disaster.

I didn't even think of mortgages

What a really crazy trip this mortgage debacle has been...and how could they not see that one coming. I don't mean AIG...

[girl gone mad]

7. I e-mailed the reporter.

If anyone else is interested, you can e-mail him too:

Zachary R. Mider in New York at [e-mail]

I told him I would like to see a follow up on this story. It would be interesting to know exactly what the offer was and why it fell through.