`Gloves' Greenberg, The Bowery's Haberdasher By LARRY McSHANE
(APW_ENG_19950622.0143)
1) The drunken and the dispossessed, the penniless and the panhandlers _ Michael Greenberg gloved them all.
2) For 30 straight winters, ``Gloves'' Greenberg single-handedly distributed free gloves to the needy between Thanksgiving and Christmas in the Bowery, a poor neighborhood in lower Manhattan.
3) Greenberg, a 67-year-old advertising executive, died Monday of cancer, an illness that last winter halted his glove handouts for the first time since 1963.
4) ``It was a very private thing for him,'' said Russell Aaronson, a cousin who plans to take over the glove-giving tradition. ``He made a point of actually looking into people's eyes, and through that, developed a trust.''
5) Trust was in short supply among Greenberg's clientele. The Bowery's homeless often wondered what Greenberg wanted in return for his gift.
6) ``A handshake,'' he replied. It almost always worked.
7) For his first 23 years, ``Gloves'' worked anonymously. But in 1976, a shopping bag filled with gloves was stolen as he rode the subway. The New York Times wrote about his plight, and the sidewalk philanthropist attained some small celebrity.
8) His Greenwich Village apartment became a home for wayward gloves, mailed in by donors.
9) Despite the attention, Greenberg always worked one-on-one with the homeless. He never dumped a large shipment at a charity or shelter; Greenberg provided each customer with his personal touch.
10) Two events led Greenberg to his career as free-lance handwarmer. While growing up in Brooklyn during the Depression, he lost a pair of gloves. He never had a replacement pair until he entered the Army.
11) Then his father died in 1963. Greenberg wanted a way to memorialize the man.
12) Initially, he handed out 72 pairs annually _ four times 18, the Hebrew symbol for life. Over the years, it grew to about 300 pairs each winter.
13) Aaronson, the next Glove Man, said the family is accepting contributions on his uncle's behalf to pay for the glove giveaway and AIDS research.
14) ``We know he's at peace now,'' Aaronson said. ``He expressed very strongly that he wanted the charity to continue. That was his wish.''


Message Was Erased Prior To End of Game, Says Coach EDs: Note language in 2nd graf
(APW_ENG_19960127.0061)
1) An anti-Semitic message found scrawled inside the visitors' locker room at New Mexico State and directed at Long Beach State coach Seth Greenberg was erased prior to the end of the game, Greenberg said.
2) Greenberg, who is Jewish, found the message prior to Monday night's nationally televised game between the two schools at Las Cruces, New Mexico. It said, ``Seth, get ready for an ass-kicking, you Jew bastard.''
3) Greenberg also complained after the game that his players _ blacks and whites _ had been the targets of racial slurs during the game. Late in the game, Greenberg had officials eject three students from the stands, accusing them of making racial remarks.
4) The Albuquerque Journal quoted Greenberg as saying he was asked to leave the anti-Semitic message on the board so that photos could be taken and made available if needed to investigators.
5) ``We left it there,'' Greenberg said Friday. ``At halftime, we left the room and locked it when we went down for the second half. When we came back, it was gone. What I want to know is, who erased it?''
6) New Mexico State officials have said they are investigating the incident and have been instructed by the Big West Conference to submit a report. A school official said Friday the report was being completed and probably would be sent to the league office early next week.
7) New Mexico State president J. Michael Orenduff this week dictated a letter that was sent to Long Beach State president Robert Maxson. The letter expressed regret over the incident, but also criticized Greenberg for comments he made regarding the anti-Semitic message and the crowd's conduct.
8) The letter to Maxson said, in part:
9) ``Considering that your coach was under considerable emotional stress, I can understand his reaction. It is however, unfortunate that his remarks, made in the heat of the moment, were telecast nationally by ESPN. His remarks impugned New Mexico State University and the entire state of New Mexico based on one anonymous piece of paper and alleged remarks which came from a very small number of people and which, in fact, were heard differently by persons close to the scene.''
10) Greenberg said after the game the scrawled message he found plus the racial harassment of his players from the stands, reflect badly on NMSU and the state of New Mexico.
11) Greenberg also has called Orenduff's letter ``an insult'' and Friday said he had not heard from anyone at NMSU.
12) Greenberg also has been angered by remarks made by New Mexico State coach Neil McCarthy that Greenberg ``just wanted attention directed to him.'' McCarthy also has attributed Greenberg's outburst to stress brought on by the recent death of Greenberg's father.
13) ``I feel bad for Neil if he feels that way,'' Greenberg said Friday from Stockton, California, where the 49ers play Pacific Saturday night. ``Obviously, he has never been the object of a hate crime.
14) NMSU regent Larry Sheffield said he felt the school had apologized and considered Orenduff's letter appropriate.
15) ``This is the first time I've ever heard of any type of racial slur. New Mexico State is color-blind,'' Sheffield said.


Emerging Markets Datafile
(APW_ENG_19971215.1112)
1) December 15, 1997
2) BUSINESS TIMES
3) MALAYSIA
4) ENGLISH
5) The World negotiates with US chief execs
6) Hardev Kaur
7) ASIA
8) WorldSources Online, Inc.
9) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
10) WASHINGTON, D.C. 20003
11) Tel: 202-547-4512
12) Fax: 202-546-4194
13) COPYRIGHT 1997 BY WORLDSOURCES ONLINE, INC., A JOINT VENTURE OF FDCH, INC.
14) AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE
15) USED IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES ONLINE, INC.
16) HARVARD: Three major agreements have been concluded in the last two weeks - the World Trade Organisation (WTO) agreement on financial services in Geneva, treaty to limit global warming in Kyoto and that eliminating landmines in Toronto. In all the three agreements the power of the US was omnipresent, even when it was not there as in Toronto.
17) The financial services agreement, reached after six years of negotiations, which calls for countries to open their financial services sector - banking, insurance and broking - illustrates the role of US businesses and the close links the chief executives have with the US administration.
18) The agreement was reached after protracted negotiations mainly because the US wanted to ``extract'' as much concessions from developing countries as possible.
19) The American firms, including Citicorp, Goldman Sachs and Merrill Lynch, established command posts at a hotel near the venue of the negotiations in Geneva. And as the deadline approached, many American chief executives were said to be conferring with the American negotiators.
20) Among the prominent and vocal American chief executive is Mr Maurice Greenberg, who heads the American International Group Inc (AIG), a New York company which has a subsidiary in Malaysia. He had insisted that the US negotiators reject any pact that could hurt AIG's existing operations in Malaysia.
21) Greenberg's AIG is not keep to divest its holdings, currently 100 per cent, allowing Malaysian participation in the company as required by Malaysian law. He was reported to have said that if ``Malaysia does not budge from its hard line position, there should not be a deal'', adding that ``I don't think we should sacrifice a couple of companies in order to have an agreement.''
22) Greenberg has considerable political clout, and he is credited among others for helping to stall the financial services agreement two years ago. According to a report, Greenberg, his companies and its employees have contributed close to US$1 million (US$1 RM3.81) to the Republican and Democratic parties in the past three years.
23) According to the Washington-based Centre for Responsive Politics, a non- profit organisation that monitors campaign contributions, AIG and its political action groups have given US$485,440 to Republican candidates and US$442,990 to the Democrats.
24) In addition, New York Republican Senator Alfonse D'Amato, according to the Wall Street Journal, who himself received US$18,250 from AIG for his campaign in recent years wrote to US Treasury Secretary Robert Rubin and US Trade Representative Charlene Barshefsky urging a hard stand at the negotiations.
25) While the Europeans were prepared to settle much earlier, it was the Americans and its chief executives such as Greenberg who were holding on.
26) The US had snubbed an earlier agreement, saying that others were giving too little in return for access to its financial services market.
27) The European companies and negotiators on their part said the US and AIG were ``asking for too much''. In fact Mr Andrew Buxton, Barclays Plc chairman, which also has operations in Malaysia, was quoted as saying: ``I would be very upset if a very important agreement was scuppered if one or two companies in the world failed to agree.''
28) To which Greenberg's reply was that AIG is the biggest foreign insurance player in Malaysia. ``The Europeans do not care if there's grandfathering or not, because they don't have any companies over there.''
29) That certainly is not true. There are many European firms with operations in Asia and certainly in Malaysia, such as the Hong Kong Shanghai Bank, Standard Chartered Bank and Barclays Plc.
30) The tussle between Malaysia and AIG was viewed as being symbolic of US attempts to pry open Asian markets. Malaysia had made it clear that it is committed to liberalising the financial services sector, but at a pace it is comfortable with.
31) Malaysia had in fact agreed to increase its offers and increased the ceiling for foreign holdings from 30 per cent to 51 per cent, but reportedly it was not good enough for Greenberg who wants to retain 100 per cent stake. Malaysian rules provide for a 51 per cent stake in local subsidiaries.
32) This according to some ``threatens the interests of financial services companies such as AIG''. But what about the position of the countries and their interests if the whole financial sector is opened to foreigners?
33) The financial services sector, despite the current crisis in the region, is seen as a potential big growth market in which the Europeans and the Americans want a stake.
34) Greenberg notes that despite the current currency crisis in the region his company, which has been in Asia for some 80 years, stands to benefit.
35) The benefits will accrue due to a number of factors. One is said to come from the interest rate increases that may be used to prop up the currencies, and it also means higher yields on the fixed income securities that insurers use to invest in premiums. AIG's 100 per cent owned Malaysian subsidiary, AIA, insures almost one million Malaysians.
36) AIG also sees opportunities to buy companies at bargain prices. In an interview with Bloomberg, Greenberg is quoted as saying: ``We see some opportunities where some very good companies may be selling at very depressed prices'' price-to-earning ratios.
37) The financial services sector, the fastest growing, is said to be worth some US$1.2 trillion in daily foreign exchange transactions, US$18 trillion in global securities, more than US$20 trillion in banking assets and US$2.5 trillion in worldwide insurance premiums.
38) The US wanted binding commitments allowing its bankers and insurers to set up majority-owned branches overseas. It also wanted guarantees that majority ownership rules for firms that have already made investments would be honoured in the event of legislative changes in a country's financial services.
39) Under the agreement reached early Saturday morning, each member put forward its own best offers for opening up the local financial services sector to foreigners. The offers differ greatly from country to country, but they are legally bound to stick to those commitments. If they do not and the World Trade Organisation (WTO) rules that they have backed down from their commitments, other countries then have the right to seek compensation or to impose retaliatory restrictions.
40) The US, the de facto power broker in the negotiations, is said to have conceded nothing for the agreement. Most of the changes are being made by developing countries in Asia, which are suffering from a currency crisis, and in Latin America. Yet, it continues to push other countries to give in.
41) Despite the agreement over the weekend, the US, according to its Trade Representative, will continue to work with some countries before the pact takes effect to improve their offers. In particular, she said, the US will work out differences with Malaysia over ``its proposal to limit foreign insurance companies to 51 per cent ownership of firms in Malaysia''.
42) She said that as part of the deal, the US would be able to impose sanctions against any country that forced US firms to divest any existing business, adding that the provision was specifically aimed at Malaysia.


Emerging Markets Datafile
(APW_ENG_19980112.1336)
1) January 12, 1998
2) BUSINESS TIMES
3) MALAYSIA
4) ENGLISH
5) AIG wants to continue investment here: Anwar
6) Kamarul Yunus
7) ASIA
8) WorldSources Online, Inc.
9) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
10) WASHINGTON, D.C. 20003
11) Tel: 202-547-4512
12) Fax: 202-546-4194
13) COPYRIGHT 1998 BY WORLDSOURCES ONLINE, INC., A JOINT VENTURE OF FDCH, INC.
14) AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE
15) USED IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES ONLINE, INC.
16) THE American International Group (AIG) Inc, a US-based insurance conglomerate, wants to continue to invest in Malaysia because it still has confidence in the country's strong economy, Deputy Prime Minister Datuk Seri Anwar Ibrahim said.
17) ``I met AIG chairman Maurice Greenberg today. What is significant during this meeting is that he has great confidence in the Malaysian economy.
18) ``He wants to continue to invest here and is committed to remain in Malaysia,'' he told reporters after meeting former US Secretary of State Dr Henry Kissinger prior to the two-day Pacific Dialogue in Kuala Lumpur yesterday.
19) Anwar was asked whether Greenberg, who will participate in the Dialogue starting today, discussed the status of 100 per cent ownership of American International Assurance, its subsidiary company in Malaysia.
20) During the recent World Trade Organisation (WTO) negotiations, most of the organisation's members have agreed with Malaysia's offer of 51 per cent foreign ownership and 49 per cent to locals for insurance companies operating in the country. The AIG, however, opposed the offer and wanted the 100 per cent ownership to remain.
21) ``I explained Malaysia's policy vis-a-vis the arrangement that we agreed on during the WTO round of negotiations but he (Greenberg) said he preferred to pursue discussions and negotiations on the issue.
22) ``I said we look forward to viewing some of his specific proposals,'' he added.
23) Asked on the proposals put forward by Greenberg, Anwar declined to elaborate, saying that it is still at a preliminary stage.
24) ``His (Greenberg) proposals were known even to American negotiators in Geneva but that has somewhat been cleared after the final settlement in the WTO agreement.
25) ``Now that it is over, he (Greenberg) has now come back with some other measures which I think are very preliminary at this stage. I look forward to see his other measures during the Pacific Dialogue tomorrow,'' he added.
26) Asked whether Malaysia will compromise with Greenberg pertaining to the foreign ownership in insurance companies operating in Malaysia, Anwar said: ``There has been a lot of compromise already but I think what is important is to get a clear undertaking from him (Greenberg) to continue to have the confidence and invest in Malaysia,'' he added.
27) Anwar also said the other American companies that will participate in the Dialogue today have indicated their commitment to continue to invest in the country.
28) ``I am pleased with this year's attendance, especially from the US business community. This is a welcome signal of continued relations, not only because of the dialogue but they have also indicated their strong commitment to continue to invest and work together with the Malaysian counterparts in improving the economy of this country.
29) ``Some of them have indicated this commitment when I met some of them today,'' he added.
30) Anwar was also asked whether the Government will revise the country's growth rate in view of the sharp fall in the ringgit last week.
31) He said the Government is confident the ringgit will slightly recover and strengthen in the next few weeks.
32) ``As we have said earlier, the ringgit has been grossly undervalued and we also have to take other measures, including intervention to ensure the ringgit would further strengthen. We also welcome initiatives like those of the International Monetary Fund and the World Bank, and now the commitment and indication of support by the US following the decision to send its Deputy Treasury Secretary Lawrence Summers to Jakarta and Kuala Lumpur.
33) ``I think this would give a clear signal that there is equal concern and commitment of the US to further strengthen the economy of these two countries to ensure that the value of currencies reflect the economic fundamentals,'' he said, adding he will be meeting Summers on Wednesday.
34) He also reminded Malaysians not to listen to rumours that there is tension in the country due to the sharp depreciation of the ringgit against the US dollar.
35) ``It is unfortunate if we choose to entertain such rumours. Apart from its strong economy, Malaysia's other strengths include the political stability and cooperation shown by the multi-racial community of the country,'' he said, when asked to comment on a Singapore-based news report that there is tension among the races in the country due to the economic problem.
36) Anwar also warned money changers that their licence would be revoked if they refuse to accept the ringgit in exchange for the US dollars, saying it is illogical for them to act in such manner.
37) He was asked on claims that certain money changers had refused to sell US dollars to people intending to visit the US.
38) ``If this has really happened, it must be an isolated case - probably one or two. But, if there are complaints and evidence, action will be taken against them. The authorities are monitoring the situation,'' he added.
39) He said so far the Finance Ministry had not received any official complaint or report on such claims, adding the matter was also not raised during his meeting with Bank Negara and bank officials on Saturday.


Emerging Markets Datafile
(APW_ENG_19980114.0697)
1) January 14, 1998
2) NATION
3) THAILAND
4) ENGLISH
5) AIG to divulge detailsof $2 bn regional fund
6) ASIA
7) WorldSources Online, Inc.
8) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
9) WASHINGTON, D.C. 20003
10) Tel: 202-547-4512
11) Fax: 202-546-4194
12) COPYRIGHT 1998 BY WORLDSOURCES ONLINE, INC., A JOINT VENTURE OF FDCH, INC.
13) AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE
14) USED IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES ONLINE, INC.
15) KUALA LUMPUR -- American International Group Inc (AIG) will reveal details of a new US$2 billion fund to invest in infrastructure projects across Asia, the Malaysian news agency Bernama reported Tuesday.
16) The exact workings of the fund will be announced in Singapore, Bernama reported. AIG's chairman and CEO Maurice ''Hank'' Greenberg was reported as saying the fund reflects the company's confidence in the future of Asia despite the economic problems the region is now facing.
17) ''We are working on a number of new investment programmes in many fields for the region, including Malaysia,'' Greenberg said. Greenberg is in Malaysia to attend the Fourth Pacific Dialogue.
18) Greenberg said the allocation of the fund would depend on the nature of the projects and how they are structured. However, he singled out areas such as the securities market and infrastructure development, Bernama said.
19) ''We are even considering locating some of our units in Malaysia as well as other parts of the region,'' Greenberg said.
20) However, Greenberg declined to comment on the recent conflict between AIG and Malaysia at the World Trade Organisation. Greenberg is known to be dissatisfied with Malaysia's offer of allowing foreign companies a 51 per cent stake in local insurance ventures under the WTO's agreement on the liberalisation on trade and services. The company's subsidiary, American International Assurance, currently controls 100 per cent of its Malaysian operations and is the biggest player in the sector.
21) But under Malaysia's offer to the WTO, the company will have to reduce its shareholding to 51 per cent.
22) Finance Minister Anwar Ibrahim on Sunday said Greenberg had wished to discuss the matter further. The two met earlier Tuesday.
23) Greenberg also said Asian central banks should consider the establishment of a fund to counter excessive currency movements.
24) ''What I'm talking about is a fund that regional central banks can use to moderate excessive currency fluctuations,'' Bernama reported him as saying.
25) ''It's one thing that the free market should flourish but you also have to prevent the type of attack that can be very destructive,'' he said.
26) Greenberg said the assistance of the IMF, which has given aid to Indonesia, Thailand and South Korea, should be sought as a last resort.


Emerging Markets Datafile
(APW_ENG_19980114.1140)
1) January 14, 1998
2) NEW STRAITS TIMES
3) MALAYSIA
4) ENGLISH
5) US firm sets up RM6.9b fund for projects in region
6) Rashid Yusof
7) ASIA
8) WorldSources Online, Inc.
9) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
10) WASHINGTON, D.C. 20003
11) Tel: 202-547-4512
12) Fax: 202-546-4194
13) COPYRIGHT 1998 BY WORLDSOURCES ONLINE, INC., A JOINT VENTURE OF FDCH, INC.
14) AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE
15) USED IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES ONLINE, INC.
16) KUALA LUMPUR, Tues. - The American International Group Inc (AIG) will set up a new US$1.5 billion (RM6.9 billion) infrastructure fund to be used for investments in various projects in the region.
17) The fund will subsequently be raised to US$2 billion, said Maurice Greenberg, chairman and chief executive officer of AIG which fully owns Malaysian insurer, American International Assurance Co Ltd.
18) He said the fund was scheduled to be announced in Singapore tomorrow.
19) Asia needed infrastructure development, though selectively, to continue the economic growth, he said.
20) ``That's something we have believed in for many, many years, being one of the things AIA had done locally for many years.
21) ``We are now reinforcing this belief by making more funds available.''
22) He told reporters on the sidelines of the Pacific Dialogue that AIG was working on a number of new investments for both Malaysia and the region.
23) The investments, he said, would be in many different fields because ``we have confidence in the future''.
24) Asked what other measures big companies like AIG could take to help the region tide over the current problems, he said: ``By investing more in the country and the region, in the securities market, direct investments and infrastructure.
25) ``We can even consider locating some of our other units in the country and in the region.''
26) Greenberg added that AIG which has been in the country for 51 years, was a very big supporter of Malaysia.
27) He declined to comment on the recent pact on financial liberalisation at the World Trade Organisation, in which Malaysia offered a 51 per cent stake to foreign companies in the insurance industry.
28) AIA is wholly-owned by AIG and this raises the question of whether AIG has to divest some of its stake in AIA.
29) Greenberg would only say he had constructive talks with Prime Minister Datuk Seri Dr Mahathir Mohamad and Deputy Prime Minister Datuk Seri Anwar Ibrahim.


Foreign firms can keep stakes in local firms for 5 years
(APW_ENG_19980504.0647)
1) Malaysian Prime Minister Mahathir Mohamad assured foreign insurance companies Monday that they will not be forced to sell off stakes in their Malaysian-based companies for five years.
2) ``We have decided that we will give them a five-year deferment,'' Mahathir told reporters after witnessing the signing of a joint-venture agreement between insurance giant American International Group Inc. and a Malaysian software company, Software International. U.S. Ambassador John Malott was also present.
3) The agreement is seen as part of the resolution of a dispute between Washington and Kuala Lumpur over AIG's ownership of its Kuala Lumpur-based American International Assurance Co. Ltd.
4) At World Trade Organization talks last year, Malaysia proposed that foreigners be barred from holding more than a 51 percent stake in local insurance companies.
5) Under those terms, AIG, which owns 100 percent of its Malaysian operation, AIA, would have been forced to divest 49 percent of its shares. AIA was set up about 50 years ago, before Malaysia began capping foreign insurers' stakes.
6) Washington insisted that Malaysia allow foreign insurers already in the country to keep 100 percent of their investments.
7) Mahathir said the five-year deferment would apply to all foreign insurers but that AIG was considered ``a very special case.''
8) M.R. (Hank) Greenberg, AIG's chairman, said the company was committed to increase its investment in the region and in Malaysia.
9) ``We invest all our reserves (from AIA) in the country and as good corporate citizens we'll continue to do that,'' Greenberg said.
10) Greenberg would not reveal the amount that AIG planned to invest in the venture but said that as the business grew, the necessary capital would be supplied.
11) The venture will serve as AIG's regional hub for software development and research and development.
12) Greenberg said AIG had set up a dlrs 1.6 billion Asian infrastructure fund and was putting together an Asian recovery fund. He did not disclose the amount.
13) After the signing ceremony, Greenberg and Alexander Lee, chairman of SIC, submitted an application to join Malaysia's high-technology project, the Multimedia Super Corridor.
14) AIG will be the first international financial company to join the MSC project, which has attracted more than 100 companies, mainly in the technology sector.


Equity rule - AIG gets 5-year grace, BUSINESS TIMES
(APW_ENG_19980505.0954)
1) xfdws EQUITY-RULE-AIG sked
2) Emerging Markets Datafile
3) May 05, 1998
4) BUSINESS TIMES
5) MALAYSIA
6) ENGLISH
7) Equity rule - AIG gets 5-year grace, BUSINESS TIMES
8) Kamarul Yunus
9) ASIA
10) WorldSources, Inc.
11) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
12) WASHINGTON, D.C. 20003
13) Tel: 202-547-4512
14) Fax: 202-546-4194
15) COPYRIGHT 1998 BY WORLDSOURCES, INC., A JOINT VENTURE OF FDCH, INC. AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE USED
16) IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES, INC.
17) AMERICAN International Group Inc (AIG) has been given a five-year grace period to comply with the 51-per cent ceiling on foreign ownership with regard to its wholly-owned American International Assurance Co Ltd (AIA).
18) ``We have decided that we will give them five years (to divest part of its equity in AIA)... until such time as we are ready,'' Prime Minister Datuk Seri Dr Mahathir Mohamad told newsmen in Kuala Lumpur yesterday after the signing ceremony for a joint venture agreement between AIG and Software International Corp Sdn Bhd.
19) The signing was witnessed by Dr Mahathir and US Ambassador to Malaysia John Mallott.
20) The Prime Minister was asked if the Government would grant AIG a waiver in relation to the Government's move to put a 51-per cent cap on foreign equity holding in Malaysian insurers.
21) On whether the policy deferment would also be granted to other foreign- owned insurance companies, Dr Mahathir said: ``It must involve everybody but I think AIG is a very special case. The others will also have five years but we considered AIG's case first.''
22) ``Of course, we cannot distinguish... but the case put up by AIG is very strong and we have to respond to that,'' he added.
23) At last year's World Trade Organisation round of negotiations to liberalise the global financial services industry, Kuala Lumpur had made known that it wanted insurance companies which are wholly-owned by foreigners to divest part of their holdings to Malaysians.
24) Washington had subsequently urged Malaysia to grant an exemption to New York-based AIG, which has operated in the country for 50 years and employs 4,000 workers, two of them Americans.
25) According to the Insurance Annual Report 1997, as at last December 31 seven branches of foreign insurers have yet to be incorporated locally.
26) However, the report noted that five of these companies had submitted restructuring plans which include local incorporation.
27) Dr Mahathir welcomed AIG's continued support, saying: ``The company has a lot of money... they are not only investing in Malaysia, but also have a reputation for keeping their earnings in this country.'' AIG signed the agreement with Software International Corp to form a joint-venture company which will engage in information technology businesses, particularly those related to the development of the Multimedia Super Corridor (MSC). Among other things, it would involve investment in MSC's smart card applications.
28) This makes AIG the first international financial institution to join the MSC. Its partner, Software International Corp, already enjoys MSC status.
29) The project's initial capital outlay is expected to be US$10 million (US$1 RM3.68).
30) Dr Mahathir expressed the hope that the commitment shown by AIG will spur a greater flow of foreign direct investments from the US.
31) ``I hope this project will be followed by others involving foreign financial companies in Malaysia, in particular in the MSC which we are promoting, and which promises good investment opportunities,'' he said.
32) Investments by foreign companies will help Malaysia to speed up the process of economic recovery from the effects of the financial turbulence which swept through the East Asian region last year, the Prime Minister said.
33) Asked for comment on the grace period granted, AIG chairman Maurice R.
34) Greenberg would only say it was ``a great change''.
35) AIG is one of the biggest underwriters of commercial and industrial insurance in the US. It operates in 130 countries and jurisdictions.
36) Greenberg also expressed confidence in Malaysia's growth prospects and that of the region.
37) ``We have been reinvesting all our reserves in the country and as a good corporate citizen we will continue to do that.''


SIC and AIG in joint venture agreement, NEW STRAITS TIMES-MANAGEMENT TIMES
(APW_ENG_19980507.1420)
1) xfdws JOINT-VENTURE-AGREEMENT sked
2) Emerging Markets Datafile
3) May 07, 1998
4) NEW STRAITS TIMES-MANAGEMENT TIMES
5) MALAYSIA
6) ENGLISH
7) SIC and AIG in joint venture agreement, NEW STRAITS TIMES-MANAGEMENT
8) TIMES
9) Azlyn A. Rahman
10) ASIA
11) WorldSources, Inc.
12) 201 PENNSYLVANIA AVENUE, S.E., 2nd Floor
13) WASHINGTON, D.C. 20003
14) Tel: 202-547-4512
15) Fax: 202-546-4194
16) COPYRIGHT 1998 BY WORLDSOURCES, INC., A JOINT VENTURE OF FDCH, INC. AND WORLD TIMES, INC. NO PORTION OF THE MATERIALS CONTAINED HEREIN MAY BE USED
17) IN ANY MEDIA WITHOUT ATTRIBUTION TO WORLDSOURCES, INC.
18) SOFTWARE International Corporation (M) Sdn Bhd (SIC) and American International Group Inc (AIG) have signed an agreement to form a joint-venture company to capitalise on business opportunities in the local information technology (IT) market.
19) Called AIG-Software International JV Sdn Bhd, the new entity will have an initial capital investment of US$10 million (RM37 million), and it will offer services including maintenance and development of applications software, technical project management, recruiting of technical personnel, research and development (R&D) in emerging information technologies and data centre services.
20) AIG's chairman Morris Greenberg said the company is pleased to respond to the call of Prime Minister Datuk Seri Dr Mahathir Mohamad to have multinational corporations located within the Multimedia Super Corridor (MSC).
21) He said through the agreement, AIG will utilise the joint firm as a preferred provider for certain services and it will also offer its services to outside organisations which include other corporate clients.
22) ``In addition, AIG hopes to offer the joint venture's services to other companies operating within the MSC as well as to assist in the development of the MSC infrastructure,'' Greenberg said, adding that the initial capital of US$10 million is sufficient as software development does not need much capital to start.
23) AIG-Software International JV Sdn Bhd will also establish an IT centre for AIG's regional operations that will be engaged in research and development in global marketing of smartcards and electronic commerce for financial services staffed with high calibre IT professionals, said Greenberg who represented AIG at the event.
24) Signing on behalf of SIC was its chairman Datuk Alexander Lee. Present to witness the ceremony were Dr Mahathir and US ambassador to Malaysia John Mallot.
25) At the event, AIG-Software International also submitted its application for MSC status to Multimedia Development Corporation Sdn Bhd.


Albany's top lawyer will step down
(APW_ENG_20000914.0169)
1) Sol Greenberg, one of the state's longest tenured district attorneys, announced Thursday he will resign next week, in time to get a Democrat on November's ballot but too late for a primary.
2) Greenberg, 78, has been district attorney in Albany County for 25 years, winning his first term in November 1974. He said he will retire to spend more time with his family.
3) ''I've been thinking about [resigning] awhile,'' Greenberg said. ''My wife and I enjoy relatively good health. I want to spend more time with our children and grandchildren and I want to get into a less pressure job.''
4) The timing of the resignation was a political gesture from the Democrat.
5) Long thought to be retiring after this term, Greenberg waited until after the Sept. 12 primary to announce the resignation, avoiding any possible Democratic infighting.
6) If Greenberg had waited until Wednesday, Sept. 20, it would have been too late to get a name on the ballot and Gov. George E. Pataki, a Republican, would have had the power to appoint someone to complete Greenberg's term until January 2002.
7) Pataki's office would not discuss the issue Thursday.
8) Assistant District Attorney Paul Clyne, a 15-year-assistant, had already started organizing for next years election and will likely get the Democratic nod. Former Assistant District Attorney John Dorfman, a vocal critic of Greenberg's, has said he wants the post.
9) Current Chief Assistant District Attorney Larry Wiest will take over as acting district attorney.
10) Greenberg's office developed a reputation of winning lengthy prison terms - especially in the mid 1980s.
11) But Greenberg also had his share of criticism, particularly for not prosecuting former Albany County Executive James Coyne for taking kickbacks during the building of the city's civic arena. Coyne was prosecuted by federal law enforcement agencies and served prison time.
12) The district attorney earns $131,400 a year.


Analysts Predict AIG Win
(APW_ENG_20010404.0972)
1) Though Britain's Prudential PLC has declared its plan to buy Texas insurer American General Corp. ``remains in full force and effect,'' analysts predicted victory for a rival bid by global insurance giant American International Group Inc.
2) Prudential issued the statement Wednesday after AIG made an unsolicited $23 billion stock offer for American General, one of the nation's largest insurance companies.
3) But AIG's offer makes more financial and strategic sense than the Prudential bid, and allows American General to be acquired by a company with a bigger worldwide presence than the London-based Prudential, analysts said.
4) ``I think it's no-brainer for American General shareholders,'' said Steve Musser, an insurance company analyst at A.G. Edwards & Sons, Inc. in St. Louis.
5) Prudential's stock bid for American General was valued at $22.5 billion after it was announced March 12, but unhappy investors sent shares sharply lower in the following weeks.
6) By Tuesday, when AIG's proposal was announced, the value of Prudential's offer had declined to about $20 billion. Prudential stock recovered Wednesday in trading on the London Stock Exchange, bumping the value of its offer for American General back up to about $21 billion.
7) But Prudential stock rose because investors were betting its proposed purchase of American General won't go through, analysts explained.
8) ``Prudential's stock is not going to stay there if things change,'' said Mark Lane, an insurance company analyst with William Blair & Co. in Chicago. ``If that deal gets done, the value's going to go down.''
9) American General must pay a $600 million breakup fee to Prudential, which is unrelated to the Newark, N.J.-based Prudential Insurance Co. of America, if it decides to combine with AIG. AIG president and CEO Maurice ``Hank'' Greenberg told analysts in a conference call that the penalty had been factored into his offer.
10) Greenberg estimated the deal would produce savings of $200 million after taxes through the elimination of overlapping costs, while Prudential had estimated its purchase of American General would generate $130 million in savings before taxes.
11) American General, based in Houston, has been considered a good takeover candidate because it holds leading market positions in both fixed and variable annuities. The company has 1,350 offices in 40 states and 16,000 workers.
12) AIG, one of the world's largest insurers, employs about 55,000 workers, and has interests in consumer finance, aircraft leasing and data processing. With headquarters in New York, it has operations in 130 countries and generates more than half of its revenues overseas.
13) Greenberg did not address possible job cuts in the conference call, but analysts said they were all but inevitable if the deal goes through.
14) Devlin said previously that a combination with Prudential would probably result in U.S. job losses.
15) Devlin would continue to run American General as a subsidiary of AIG, and would be given the post of vice chairman with AIG and a seat on the company's board.
16) During the conference call, Greenberg declined to answer a question about who would eventually succeed him, saying AIG's board of directors would make that decision.
17) His son, Evan, resigned last September as president and chief operating officer of AIG less than a year after being proclaimed corporate heir by his 75-year-old father.
18) American General spokesman John Pluhowski didn't return telephone messages left Wednesday seeking comment on the AIG offer. American General said in statement Tuesday that its board would consider the proposal.
19) American General shares closed up $5.20, or 14 percent, at $42 Wednesday on the New York Stock Exchange. AIG shares were down $3.37, or 4 percent, to $76.84, also on the NYSE. Prudential shares closed up 76 cents, or 7 percent, to $11.40 in London.


Greenberg Heads to South Florida
(APW_ENG_20010621.1302)
1) Brad Greenberg, a former general manager of the Philadelphia 76ers, was introduced Thursday as director of basketball operations at South Florida, where his brother is the head coach.
2) Brad Greenberg, 47, will handle day-to-day administrative duties for the men's team as well as team travel, scheduling, academics and scouting.
3) ``Over the years I have become increasingly more interested in the college basketball scene,'' said Greenberg, who was the 76ers GM and vice president in 1996-97. He was responsible for drafting Allen Iverson in 1996.
4) Seth Greenberg has been the head coach at South Florida for five seasons.
5) ``I've spent a lifetime talking basketball with Seth and sharing thoughts,'' Brad Greenberg said. ``That's another reason (joining USF) is so special.''
6) Brad Greenberg will report to athletic director Lee Roy Selmon.
7) He has been vice president of player personnel for the Portland Trail Blazers, an assistant coach for the Los Angeles Clippers and New York Knicks and a scout for Portland and the Orlando Magic.


McDonald's CEO's 2001 bonus unchanged at dlrs 1.2 million
(APW_ENG_20020405.1103)
1) McDonald's Corp. chairman and chief executive Jack Greenberg received a 2001 bonus of dlrs 1.2 million, unchanged from the previous year, according to a filing Friday with the Securities and Exchange Commission.
2) Greenberg's salary was dlrs 1.4 million last year, up slightly from the dlrs 1.3 million he got in 2000.
3) McDonald's said the annual bonuses paid to executives for 2001 were ``substantially'' below target because the company failed to achieve financial objectives.
4) The no. 1 U.S. hamburger chain said in March that Greenberg had agreed to remain as CEO for at least three more years. He's been a director since 1982 and chairman and CEO since 1999.
5) Greenberg was granted 675,000 stock options in 2001 with exercise prices of dlrs 29.43 and dlrs 28.90, the filing said.
6) In 2001, Greenberg exercised 150,000 stock options for a profit of dlrs 2.8 million. At the end of the year, he held 2.2 million vested options with an estimated value of dlrs 13.7 million as well as 2.8 million unvested options.


AIG asks NYSE, SEC to probe possible short selling
(APW_ENG_20020422.1343)
1) American International Group Inc. has asked the New York Stock Exchange and the Securities and Exchange Commission to investigate ``considerable short selling'' of its shares Monday.
2) The insurer said Monday it asked for an investigation of the activity after its stock traded down significantly.
3) Shares of AIG closed Monday at dlrs 69.71 on the Big Board, down dlrs 1.08, or 1.5 percent, on heavy volume.
4) AIG's shares were down as much as 4.7 percent earlier Monday as a trading floor rumor spread that the Securities and Exchange Commission may review the company.
5) Joe Norton, an AIG spokesman, told Dow Jones that the company doesn't comment on share price movement or market rumors as a matter of corporate policy.
6) AIG's first-quarter earnings are scheduled to be released April 25.
7) New York-based AIG is one of the world's largest insurance companies.


AIG reports earnings rise in first quarter, matching expectations By ADAM GELLER
(APW_ENG_20020425.1182)
1) Insurance giant American International Group Inc. reported a 6.7 percent increase in first-quarter earnings, boosted by rising premiums. The operating results matched analysts' expectations.
2) The New York-based company said Thursday its net income for the quarter was dlrs 1.98 billion, or 75 cents per share, up from dlrs 1.86 billion, or 70 cents a share a year ago.
3) Not counting costs resulting from losses in capital and a change in accounting rules, AIG said income rose 11.1 percent to dlrs 2.13 billion, or 81 cents per share, from dlrs 1.92 billion, or 72 cents a share during the same quarter of last year.
4) The 81-cent figure matched a consensus estimate of analysts surveyed by Thomson Financial/First Call.
5) The increase in earnings reflected moves by the company to raise premiums for its insurance customers across market sectors. In its worldwide general insurance business, premiums grew by 30.2 percent. In AIG's worldwide life insurance business, revenue from premiums swelled 15.4 percent.
6) ``AIG is off to a very good start in 2002,'' chairman Maurice R. Greenberg said in a written release.
7) ``In the property-casualty business around the world, rates are continuing to strengthen as we have indicated in prior quarters, helping to produce strong results from our general Insurance business in the quarter,'' he said.
8) In addition to collecting larger premiums, the percentage of those revenues being used to cover claims dipped in the quarter. The company's combined ratio _ the portion of each dollar that goes to paying out claims _ declined to 95.76 from 95.89 a year ago.
9) ``We expect rate and coverage improvements to continue for the foreseeable future,'' Greenberg said.
10) Operating earnings in AIG's general insurance business declined 1.9 percent to dlrs 933.3 million while income from its life insurance business rose 16.7 percent to dlrs 1.33 billion.
11) AIG said it continues to make progress in integrating American General Corp., the Houston-based insurance firm it bought last year. AIG said it is ``on or ahead of schedule'' in efforts to improve productivity and marketing and expects to meet or exceed its goal of dlrs 400 million in cost savings by 2003.


Organs of son of prominent American rabbi donated to six people
(APW_ENG_20020930.0695)
1) The organs of New York philanthropist Jonathan Greenberg, who was killed while biking in Israel, have been transplanted into six people, including a Palestinian man.
2) Greenberg, 37, was the son of prominent New York Rabbi Yitzhak Greenberg and feminist Blu Greenberg.
3) It marked the second time in a week that rabbis sanctioned organ transplants. Last week, a Jewish seminary student from Scotland who was killed in a Tel Aviv bus bombing had his organs transplanted.
4) Several years ago, Israel's Chief Rabbinate ruled that saving lives overrides the requirement to bury an intact body. Not all rabbis recognize the decision.
5) On Sunday, Greenberg's parents held an emotional meeting at an Israeli hospital with two men who received a kidney and cornea from their son. A Palestinian man, 51, from east Jerusalem received Greenberg's liver.
6) ``The meeting can't bring back our son and we can't get over what happened,'' Yitzhak Greenberg was quoted as saying by the Maariv daily. ``But on the other hand there is a feeling of happiness and we feel that Jonathan will continue to contribute to the lives of others.''
7) Greenberg was biking with a friend on a highway near Israel's coast on Sept. 13 when he was hit by a car and seriously injured. He died the next day.
8) He was the executive director of the U.S.-based Jewish Life Network, which support Jewish social and educational programs. Greenberg was buried in Jerusalem.
9) All recipients were recovering well, hospital officials said Monday.


McDonald's chairman to retire at year's end
(APW_ENG_20021205.0534)
1) McDonald's Corp. is replacing its chairman and chief executive, Jack Greenberg, as it struggles to emerge from a deep, two-year slump.
2) The fast food chain Thursday said Greenberg will retire at the end of this year after 21 years at the company. McDonald's board elected the company's president and vice chairman, Jim Cantalupo, to take over the top two spots.
3) McDonald's has reported lower earnings in seven of the past eight quarters and recently announced it is cutting back its expansion pace as it grapples with a crowded restaurant market, complaints about poor service and a depressed stock price. Several Wall Street analysts had been urging for months that Greenberg be replaced.
4) McDonald's stock price has lost about two-thirds of its value since Greenberg was named to the top job in 1998. Shares of McDonald's, which had been up nearly 3 percent before the announcement, were up 2 cents to $18.39 in afternoon trading on the New York Stock Exchange.
5) ``In every company's history, there is a time when it is appropriate to pass the baton and give a new management team the opportunity to lead, and that time has come at McDonald's,'' Greenberg said in a company news release.


AIG to take $1.8 billion charge
(APW_ENG_20030204.0317)
1) American International Group Inc. said it will incur a fourth-quarter net charge of $1.8 billion to boost reserves by $2.8 billion for general insurance net losses and loss-adjustment reserves.
2) The insurance and financial-services giant said late Monday that 60 percent of the reserve increase will be applied to excess casualty loss reserves, including excess workers' compensation.
3) About 25 percent is related to directors and officers insurance, in which AIG is the leading U.S. writer. The remaining 15 percent is related to other casualty, including health-care and medical malpractice insurance.
4) The charge is unrelated to asbestos reserves, which continue to be adequate, AIG said.
5) The company's $2.8 billion addition to reserves, despite its size, is a ``blip,'' not a major event for the company, its top executive said Tuesday.
6) On a conference call with analysts, M.R. ``Hank'' Greenberg, AIG's chairman, said the New York insurer took a more conservative approach in its annual year-end reserve review, in part due to a spike in losses in claims from 1997 to 2001. Greenberg attributed much of the spike to one of his pet peeves _ an out-of-control legal system and rising litigation costs.
7) If the company had taken its historic approach to reserves, the increase only would have been $700 million to $800 million less, Greenberg said. However, Greenberg felt more comfortable using the conservative approach.
8) Shares of AIG were at $50.50 in early trading Tuesday on the New York Stock Exchange, down $4.83, or 8.7 percent.
9) The company added that shareholders' equity at year-end 2002 will exceed the $58 billion reported at Sept. 30, despite the reserve charge.
10) AIG said general insurance business will continue to grow in 2003, with higher premiums both in the United States and overseas. Most premium growth is expected from rate increases, rather than additional risk exposures.
11) In January, new cash flow for investments from domestic general insurance operations reached $800 million. Cash flow for all of 2003 should substantially exceed that of 2002, the company said.
12) General insurance loss reserves are expected to grow between $4 billion and $5 billion in 2003.
13) AIG expects to post a return on equity of 15 percent in 2003.
14) AIG is expected to post fourth-quarter earnings excluding items of 91 cents a share, compared with 77 cents per share in the prior fourth quarter, according to a survey of analysts by Thomson First Call. The earnings are expected to be reported on Feb. 13.


Report: Grasso pressured firm to buy more AIG stock
(APW_ENG_20031003.0201)
1) Ousted New York Stock Exchange Chairman Dick Grasso pressured a floor-trading firm to buy more shares in American International Group Inc. after the insurer's chairman complained to him, according to a newspaper report.
2) Grasso made the suggestion to the firm after receiving written complaints from AIG Chairman Maurice Greenberg, a previous NYSE director, The Wall Street Journal reported in Friday editions, citing unnamed sources familiar with the matter.
3) Greenberg was a member of the NYSE's compensation committee that determined Grasso's $187.5 million pay package. Outrage over the size of the compensation led to Grasso's resignation two weeks ago.
4) Greenberg complained in an Oct. 23, 2002 letter to Grasso about Goldman Sachs Group Inc.'s Spear, Leeds & Kellogg unit, the ``specialist'' assigned to facilitate trading in AIG, the Journal said.
5) On multiple occasions following Greenberg's complaints, Grasso went to the trading floor and suggested that Spear increase its buying of AIG shares, the Journal said.
6) The Journal said buying the additional shares resulted in roughly $14 million in trading losses for Spear in the past few years.
7) Grasso declined to comment through a representative, the Journal said.
8) A call before business house Friday morning to a spokesman for the NYSE was not immediately returned.
9) Greenberg told the Journal that for years he has criticized the NYSE specialist system, which assigns firms to match buy and sell orders from investors. The specialist firms use their own money to buy shares when buyers and sellers do not agree on a price.
10) ``If I think the specialist is not doing the job he should be doing in buying stock when the stock is under pressure ... then I'm going to complain,'' Greenberg told the Journal, adding that it would be wrong to ``read something sinister'' into his actions.
11) A spokesman for Goldman Sachs told the Journal that Spear believed it had acted appropriately in the situation.


Report: SEC issues subopoenas to former NYSE boss Grasso, others in probe
(APW_ENG_20040312.0378)
1) The Securities and Exchange Commission is reportedly issuing subpoenas to former New York Stock Exchange chairman Dick Grasso and others as it examines whether Grasso engaged in ``influence trading'' during his eight years leading the exchange.
2) The Wall Street Journal, citing unidentified people close to the situation, reported Friday that the SEC is looking into whether Grasso urged the NYSE's specialists, who bring buyers and sellers together on the floor of the exchange, to buy additional shares of American International Group Inc. in an attempt to shore up the company's flagging stock price.
3) The report noted that AIG chairman Maurice ``Hank'' Greenberg complained in 2002 that the specialists had not done enough to curb the drop in price. Greenberg was a member of the NYSE board from 1996 to 2002 and was part of its compensation committee. In 1999, the compensation committee approved Grasso's $187.5 million salary and retirement package, over which Grasso resigned last year.
4) A spokesman for AIG would not confirm to The Associated Press whether Greenberg received a subpoena. However, AIG said in a statement that Greenberg's efforts in dealing with specialists were appropriate.
5) ``It is the job of all CEOs to insure their specialists perform their jobs the way they are supposed to,'' the statement said. ``Mr. Greenberg has made his disillusionment with the specialist system clear and unequivocal.''
6) The AIG incident came to light in October, just as the furor over Grasso's compensation reached its peak. Greenberg is no longer a member of the NYSE board.
7) The SEC is also issuing subpoenas to Greenberg as well as specialists from Goldman Sachs subsidiary Spear, Leeds & Kellogg, the specialist firm that manages AIG stock, the Journal said, citing people close to the situation.
8) The NYSE and Goldman Sachs would not comment to The Associated Press on the subpoenas. Calls to the SEC and Grasso attorney Brendan Sullivan by the AP were not immediately returned Friday.


AIG to pay $126 million to settle two investigations as a third emerges
(APW_ENG_20041124.0271)
1) American International Group Inc., one of the biggest U.S. insurance companies, said Wednesday would pay $126 million (euro95.85 million) to settle allegations by federal authorities that it helped two customer companies commit accounting fraud.
2) Under an agreement awaiting Securities and Exchange Commission approval, AIG will pay $46 million (euro35 million) fine to the watchdog agency to settle issues surrounding transactions that helped regional bank PNC Financial Services Group Inc. pump up its earnings. AIG will also submit to an independent monitor who will examine certain transactions by the company between 2000 and 2004 to determine whether any related parties violated accounting rules to achieve certain results.
3) New York-based AIG will pay another $80 million (euro60.8 million) to the Department of Justice to settle a related investigation and avoid prosecution.
4) The tentative deal to wrap up those investigations came as The Wall Street Journal reported that said federal prosecutors in New York are investigating whether AIG Chairman Maurice "Hank" Greenberg manipulated the huge insurance company's share price in 2001 to save money on a big acquisition.
5) The U.S. Attorney's office in Manhattan is looking into whether Greenberg illegally interfered with his company's share price just before AIG's acquisition of insurer American General Corp. in August 2001, the Journal reported, citing people familiar with the matter.
6) Greenberg sought the help of the Dick Grasso, then chairman of the New York Stock Exchange, for help keeping the company's shares above a trigger price that would have requited AIG to pay more for Houston-based American General, the sources told the newspaper.
7) Grasso wasn't in the office that day, but the request was relayed to floor traders overseeing AIG stock, the sources said, though it was unclear if they interfered to shore up AIG shares.
8) The inquiry is in its early stages and may not result in criminal charges, the Journal said.
9) AIG spokesman Joe Norton told the newspaper, "Mr. Greenberg has not been contacted or interviewed by the U.S. Attorney's office, and therefore he has no ability to opine on what they are or are not investigating."
10) The insurer had previously disclosed that the SEC was considering suing it for civil securities fraud over several 2001 transactions it conducted with PNC, and that the Justice Department was weighing criminal prosecutions against it in both the PNC matter and one involving cell phone distributor Brightpoint Inc.
11) AIG settled the Brightpoint case with the SEC in September 2003, agreeing to pay a $10 million civil fine to resolve allegations that it fraudulently helped the company falsify its earnings report and hide losses. As in all SEC settlements, AIG neither admitted nor denied the allegations.
12) Brightpoint, based in Plainfield, Indiana, in late 2001 restated its earnings for the previous 3 1/2 years _ leading to shareholder lawsuits against the company.
13) The SEC's investigation of AIG's dealings with PNC are said to involve three 2001 transactions in which the Pittsburgh-based bank increased its earnings by shifting $762 million of poorly performing loans and other assets off its balance sheet, allegedly in violation of generally accepted accounting principles.
14) __
15) On the Net:
16) American International Group Inc.: http://www.aig.com
17) Securities and Exchange Commission: http://www.sec.gov
18) PNC Financial Services Group Inc.: http://www.pnc.com
19) Brightpoint Inc.: http://www.brightpoint.com


AIG's $126 million settlement provides for independent monitor, avoids criminal prosecution
(APW_ENG_20041130.0226)
1) Insurance giant American International Group Inc., which is paying $126 million (euro95 million) to settle federal authorities' allegations of aiding accounting fraud by other companies, has accepted an independent monitor but will avoid criminal prosecution.
2) The Securities and Exchange Commission and the Justice Department announced Tuesday that they had reached formal settlements with AIG, which disclosed last week it had agreed to make the payments. The insurer agreed to pay $46 million (euro35 million) in an accord with the SEC to settle allegations of civil securities fraud over three 2001 transactions it made with PNC Financial Services Group Inc. that allegedly helped the regional bank artificially inflate its earnings. The money will go to shareholders injured by the alleged fraud.
3) AIG also agreed to pay $80 million (euro60 million) in an accord with the Justice Department that allows it to avoid prosecution and resolve an investigation into the PNC matter and one involving cellphone distributor Brightpoint Inc.
4) New York-based AIG neither admitted nor denied the allegations in agreeing to pay the $126 million (euro95 million), which includes fines, restitution and interest.
5) The two agencies' actions show that they "will use the full range of the government's criminal and civil enforcement powers against corporations that promote and facilitate fraudulent financial transactions," Deputy Attorney General James Comey said in a statement.
6) AIG is said to have improperly sold insurance contracts to the companies to help them smooth earnings volatility from quarter to quarter. The relatively new practice, which is legal in principle and common in the insurance industry, has recently come under scrutiny by regulators for how it is executed.
7) SEC Enforcement Director Stephen Cutler said Tuesday that going forward, "In appropriate circumstances, marketers of such products will be held liable for the resulting misstatements in their customers' financial disclosures."
8) AIG's sales to the companies allegedly involved what appeared to be insurance but didn't include any actual transfer of risk from them to the insurer.
9) The SEC said in a civil lawsuit that, for a fee, AIG offered to establish special-purpose entities to which companies could transfer troubled or potentially volatile assets. Despite concerns raised by outside auditors for some targeted companies that the arrangements could violate accounting rules, AIG continued to market the deals, the SEC alleged.
10) In the PNC case, the agency said, AIG entered into three such transactions with the Pittsburgh-based bank that allowed it to move $762 million (euro573 million) in loan and venture-capital assets off its balance sheet. AIG, which received $39.8 million (euro29.9 million) in fees from PNC for the three transactions, was "reckless in not knowing" that they violated generally accepted accounting principles, the SEC said.
11) The imposition of an outside monitor is quite rare in cases of corporate sanctions. Under the accords, the monitor will be chosen by the SEC, Justice and the company, and will review transactions conducted by AIG between 2000 and 2004 to determine if there were other violations. AIG also must establish a transactions review committee, whose policies and procedures will be reviewed by the monitor.
12) AIG Chairman Maurice "Hank" Greenberg, in a statement issued by the company, said, "This comprehensive settlement brings finality to the claims raised by the SEC and the Department of Justice. The role of the independent consultant complements our own transaction review processes. We welcome this enhancement to our overall risk management and control mechanisms."
13) Federal prosecutors in New York reportedly are investigating whether Greenberg manipulated AIG's share price in 2001 to save money on the company's acquisition of insurer American General Corp. The inquiry is said to be in its early stages and may not result in criminal charges.
14) AIG settled its Brightpoint case with the SEC in September 2003, agreeing to pay a $10 million civil fine to resolve allegations that it fraudulently helped the company falsify its earnings report and hide losses. Brightpoint, based in Plainfield, Ind., in late 2001 restated its earnings for the previous 3 1/2 years _ leading to shareholder lawsuits against the company.
15) AIG shares fell 43 cents to close at $63.35 Tuesday on the New York Stock Exchange. Its shares have been recovering from a 52-week low of $54.28 in mid-October.


Report: Greenberg steps down as CEO amid regulatory inquiries,remains chairman
(APW_ENG_20050315.0095)
1) Maurice R. Greenberg has stepped aside as chief executive of American International Group Inc. amid concern over a rising number of regulatory inquiries at the financial services titan he built over nearly four decades, The Wall Street Journal reported Monday.
2) The Journal, which did not cite a source for the report on its Web site Monday night, said the board named Martin Sullivan _ a co-chief operating officer and vice chairman _ as chief executive.
3) Greenberg, who formally retired, will remain as chairman of the company, the newspaper said.
4) Earlier Monday, the cable network CNBC said Greenberg would step down as CEO Monday night. The New York Times, in its Monday edition, said the board was looking at the "potential impact" of regulatory investigations on Greenberg's future and on AIG.
5) AIG spokesman Joe Norton was not immediately available for comment Monday night on the report.
6) Greenberg's departure as CEO would be the third such high-profile departure in recent weeks. The boards of Hewlett-Packard Co. and Boeing Co. have recently forced out CEOs.
7) AIG shares fell 86 cents, or 1.3 percent, to close at $63.85 in Monday trading on the New York Stock Exchange. That's near the middle of the 52-week trading range of $54.28 to $77.36.
8) Analysts at UBS Investment Research, which rates the stock "Buy 1," said in a research report that "the optimal scenario" would be if Greenberg relinquished the CEO post but remained chairman. It added that "the caliber of AIG's executive bench is strong across all of its businesses," suggesting that management could weather the shakeup.
9) Sullivan, named as Greenberg's possible successor as CEO, joined AIG in 1971 in London, according to the company. He held a number of management positions before assuming the posts of co-chief operating officer and vice chairman in May 2002. At that time, he also was named one of seven members of the "office of the chairman." Sullivan serves on AIG's board.
10) AIG, which is headquartered in New York, is one of the world's largest property-casualty insurers. And Maurice Greenberg, 79 and known to most by his nickname "Hank," is the father of an insurance industry dynasty.
11) His son Jeffrey W. Greenberg resigned last October as chairman and chief executive of the insurance brokerage Marsh & McLennan Companies Inc. amid an investigation by the New York attorney general's office into bid rigging, price fixing and hidden incentive fees. Marsh & McLennan reached a settlement in the case Jan. 31, agreeing to pay $850 million in restitution.
12) Another son, Evan G. Greenberg, is president and chief executive officer of Bermuda-based ACE Ltd.
13) Maurice Greenberg joined AIG in 1960 and became president in 1967 when it was a seller of property-casualty insurance in the United States and had a major life-insurance business in Asia. He assumed the chairmanship in 1989. It has grown into one of the world's most powerful financial-services companies with a market capitalization of $168.5 billion. Greenberg is one of the company's largest individual shareholders, the Journal said.
14) According to recent filings with the Securities and Exchange Commission, Greenberg directly controls more than 43.3 million AIG shares and indirectly controls an additional 23.7 million. The company had 2.64 billion shares outstanding in 2004.
15) AIG was mentioned in the case brought against Marsh & McLennan by New York Attorney General Eliot Spitzer, but was not charged. But four former AIG executives have entered guilty pleas to criminal charges stemming from the investigation, along with six others from Marsh & McLennan, Zurich American Insurance Co. and ACE.
16) Last November, AIG agreed to pay $126 million to settle allegations of securities fraud by the SEC and the Justice Department related to three 2001 transactions it made with PNC Financial Services Group Inc. that allegedly helped the Pittsburgh-based banking company artificially inflate its earnings.
17) Part of the settlement also went to resolve a similar case involving Brightpoint Inc., a Plainfield, Ind., cell phone distributor.
18) Under that settlement, an independent monitor is examining AIG's books to see if there are any other questionable deals.
19) AIG, without admitting or denying guilt, also settled civil-fraud charges with the SEC, paying a $10 million fine.
20) In the latest investigation, AIG has been the focus of a probe by Spitzer, federal prosecutors and the SEC into the use of so-called finite insurance, or financial reinsurance, which critics say could be used to manipulate earnings. The transaction under investigation took place between AIG and Berkshire Hathaway Inc.'s General Reinsurance unit four years ago and apparently was intended to shore up AIG's reserves.


AIG fires two top executives as probe into company intensifies
(APW_ENG_20050322.0723)
1) American International Group Inc., one of the world's biggest insurance companies, fired two top executives for failing to cooperate with government investigators, a spokesman for the company said Tuesday.
2) The dismissals of Howard I. Smith, who had been AIG's chief financial officer, and Vice President Christian M. Milton, were first reported in Tuesday editions of The Wall Street Journal.
3) AIG spokesman Chris Winans said that the men were terminated because of company policy "that requires employees to cooperate with government authorities on matters pertaining to the company."
4) The Journal said AIG took action after the men signaled they would invoke their constitutional rights against possible self-incrimination amid a probe into whether AIG manipulated its books to mislead investors.
5) Smith took leave from the company last week in a management shuffle that also saw the board remove longtime chairman Maurice "Hank" Greenberg as chief executive officer, a post he had held for nearly 40 years.
6) Greenberg, 79, was to retire as CEO but remain nonexecutive chairman of the company.
7) AIG shares fell 63 cents, or 1 percent, to $57.27 in morning trading on the New York Stock Exchange.
8) The Journal said both Smith and Milton were likely to be knowledgeable about a transaction under scrutiny by federal and state regulations involving General Re Corp., a unit of Berkshire Hathaway Inc.
9) Smith reportedly met Monday with investigators from the offices of New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Spokesmen for Spitzer declined comment. The attorney for Smith was not immediately available for comment, his office said.
10) Milton's attorney, Frederick P. Hafetz, told The Journal he was told that AIG had put his client on leave without pay.
11) "Mr. Milton did not do anything wrong," Hafetz said.
12) The probe by Spitzer, the SEC and federal prosecutors involves a complex deal involving reinsurance, which the investigators allege may have been used to manipulate AIG's books rather than spread risk. AIG reportedly booked $500 million (euro380 million) in premium revenue from General Re and then added $500 million in reserves to its balance sheet. The transactions took place in late 2000 and early 2001.
13) The Journal also reported Tuesday that AIG may have "unwound" at least half of the transaction last year.
14) New York-based AIG has said it would cooperate with multiple inquiries into its accounting.
15) It has been conducting its own probe into the reinsurance transactions.
16) The Journal also reported Tuesday that regulators have expanded their probe into AIG's reinsurance dealings to include the company's relationships with two obscure reinsurers _ Union Excess Insurance Co. and Richmond Insurance Co., both located in Barbados.
17) At issue, the paper said, is whether Union Excess and Richmond Insurance are independent companies or under AIG's control and whether AIG properly accounted for transactions with the companies.


Report: AIG's concerns over accounting grow broader
(APW_ENG_20050325.0428)
1) American International Group Inc., one of the world's biggest insurance companies, is considering a move to clean up suspected accounting mistakes that may total as much as $3 billion (euro2.3 billion) from as many as 30 insurance transactions, The Wall Street Journal reported in Friday's editions.
2) The Journal, citing unidentified sources familiar with the case, said potentially problematic accounting now being examined is far broader than was believed just a week ago.
3) AIG has yet to assess an additional 60 transactions that internal investigators have identified as possibly problematic, one person familiar with the matter told the Journal. A number of senior AIG executives were aware of many of these transactions, which could subject them to regulatory scrutiny, the source told the newspaper.
4) Chris Winans, an AIG spokesman , told the newspaper the company had no comment.
5) Last week, questions over AIG's accounting of an insurance transaction with a Berkshire Hathaway Inc. unit led to the ouster of Maurice R. "Hank" Greenberg as AIG's chief executive after nearly four decades at the helm. Investigators continue to examine whether AIG misled investors by manipulating its books.
6) This week, AIG, which has pledged to cooperate with investigators, fired its chief financial officer and a senior reinsurance executive after they decided not to answer some questions on the grounds that their answers might be self-incriminating.
7) Though it's unclear how AIG might account for its mistakes, even a multibillion-dollar charge against earnings likely wouldn't damage its long-term financial stability, the Journal said. The company posted income of $11.04 billion last year on revenue of $98.61 billion.


Hank Greenberg ends 37-year career at helm of AIG, faces deposition with New York regulators
(APW_ENG_20050329.0530)
1) The man who built American International Group Inc. into one of the world's largest insurers, Maurice "Hank" Greenberg, is retiring as chairman, two weeks after board members ousted him as chief executive because of intensifying regulatory probes into the company's past financial transactions.
2) Greenberg _ who will end his 37-year career atop AIG later this week _ departs as he and the company face an expanding probe by the Securities and Exchange Commission and New York State Attorney General Eliot Spitzer.
3) Meanwhile, The Wall Street Journal reported in Tuesday's editions that Warren Buffett, the billionaire investor who is chairman and CEO of Berkshire Hathaway Inc., has been called by regulators to answer questions next month. The Journal, citing unidentified sources familiar with the case, said Buffett will be asked about any involvement he might have had in a controversial insurance transaction between a Berkshire unit and AIG.
4) AIG replaced Greenberg, 79, as CEO March 14 as scrutiny mounted over a 2000 transaction that appeared to have been used to artificially boost the company's reserves. Since then, SEC investigators have issued subpoenas for a dozen AIG executives and have uncovered 10 financial transactions that warrant greater scrutiny, a source told The Associated Press Monday, confirming an earlier report in the Journal.
5) There had been widespread speculation about how long New York-based AIG would continue its relationship with Greenberg, who also faces an April 12 meeting with Spitzer's investigators in response to a subpoena.
6) Under investigation are a number of reinsurance transactions _ insurance purchased by insurance companies _ that regulators contend were designed to improve AIG's financial statements without the transfer of risk. Risk transfer is necessary for a deal to be an insurance transaction and determines how it's carried on a company's books.
7) Greenberg joined the company in 1960, and took over as its head eight years later when founder C.V. Starr died. While Greenberg is considered a pioneer in the insurance world _ shaping AIG from a small life insurance company to a global insurer with revenues approaching $100 billion (euro77 billion) _ his presence at the company had become seen as an obstacle for AIG in settling the regulatory inquiries.
8) AIG said lead director Frank G. Zarb will assume the duties of chairman until a new one is selected. Greenberg's departure is effective Wednesday or Thursday when he returns from an overseas business trip.
9) Regulators expect to interview Buffett on April 11 about documents and witnesses that they believe indicate he was involved early on in discussions about the transaction between General Re Corp., a unit of Berkshire Hathaway, and AIG, including its structure, the source told the Journal. Buffett, 74, is scheduled to give a deposition the following day.
10) Investigators suspect that before General Re completed the transaction in 2000, the unit's then-CEO, Ron Ferguson, briefed Buffett on the nature of the deal, the Journal said, citing its source.
11) Buffett declined through a spokeswoman to comment for the Journal story. Ferguson, reached by phone by the Journal, declined to comment.
12) AIG has fired three executives _ including Chief Financial Officer Howard I. Smith _ for not cooperating with investigators, and it remains unclear how much Greenberg will say as part of the probes.
13) On Sunday, the company forced out Michael Murphy, an executive who worked for American International Co., a Bermuda-based unit of AIG. AIG spokesman Chris Winans said Murphy was terminated "for failure to cooperate with investigators." He declined further comment.
14) A number of other AIG executives have been dismissed, including four who entered guilty pleas in the probe launched by Spitzer into bid rigging and price fixing by New York-based broker Marsh & McLennan Companies Inc.
15) In a statement e-mailed to reporters late Monday, Spitzer praised AIG board's for making "difficult decisions."
16) "While there is a long way to go before this investigation is complete, the wise actions of the AIG board will help set this investigation on a path toward resolution," Spitzer said. "I commend the AIG board for acting in a way that sets it apart from other boards that have faced similar problems in recent years."


AIG acknowledges improper accounting, delays filing annual report
(APW_ENG_20050330.1217)
1) Amid widening government probes into its financial practices, insurance giant American International Group Inc. acknowledged Wednesday it had improperly booked transactions with a unit of Berkshire Hathaway Inc. that artificially boosted its reserves.
2) AIG also said that it had not yet completed an in-house review of its accounting and would have to delay filing its annual report until April 30. New York-based AIG earlier had said it expected to file the report on March 31.
3) The disclosures came as the Securities and Exchange Commission and New York Attorney General Eliot Spitzer were preparing to question AIG's former chief executive officer, Maurice "Hank" Greenberg, and Berkshire Hathaway's chairman and CEO, billionaire investor Warren Buffett, next month about the controversial reinsurance deal. Buffett is to speak with investigators on April 11, and Greenberg the following day.
4) Berkshire Hathaway has said that Buffett was not aware of how the transactions were structured "or on any improper use or purpose" of the transactions.
5) Greenberg, who is 79 and led AIG for nearly 40 years, was forced out as CEO by the board earlier this month and has said he will resign shortly as chairman of the company.
6) In a detailed four-page statement, AIG also disclosed a number of other accounting problems, including the way it booked deals with Caribbean-based insurance companies.
7) AIG said, however, that "the maximum aggregate effect" of known errors and changes in accounting would reduce the company's $82.87 billion (euro64.03 billion) in capital by about $1.7 billion (euro1.31 billion), or 2 percent.
8) Howard Mills, acting superintendent of New York state's insurance department, which is also participating in the investigation, called AIG's statement "pretty significant" and added: "These are very serious issues, and their own admission that they misled this department, we take very seriously."
9) Mills said that AIG needs to continue "to get their house in order, and we believe they will do so."
10) The Standard & Poor's ratings agency cut AIG's long-term counterparty credit and senior debt ratings to AA-plus from AAA, and took similar action on the ratings of most of the company's subsidiaries.
11) "The number and scope of inappropriate financial transactions ... have diminished Standard & Poor's assessment of management and its internal controls, corporate governance and aggressive culture," the agency said in a statement. It worried that management's attention will be diverted from business efforts to dealing with legal and regulatory issues.
12) Fitch Ratings, meanwhile, put AIG's AA-plus rating on its "negative watch" list, saying it will downgrade "if material additional items arise during the company's ongoing review.
13) AIG shares dropped $1.04, or 1.8 percent, to close at $57.16 in Wednesday trading on the New York Stock Exchange. Berkshire Hathaway shares closed virtually unchanged at $87,000.10, also on the Big Board.
14) The investigators are looking to a number of reinsurance transactions, which involve insurance purchased by insurance companies like AIG. Reinsurance traditionally has been used to spread out risk among insurers but, in some cases, it has been used for the questionable purpose of polishing a company's financial statements. If there is no risk transfer, the deal shouldn't be booked as insurance.
15) In the case under review, AIG purchased reinsurance from Berkshire Hathaway's General Re Corp. in the fourth quarter of 2000 and first quarter of 2001. Investigators have said that AIG used the deals to pump up its reserves when markets were uneasy about the company's outstanding liabilities.
16) AIG said Wednesday that its accounting for the transactions with General Re "was improper and, in light of the lack of evidence of risk transfer, these transactions should not have been recorded as insurance."
17) One of the transactions was unwound in November 2004, AIG said. For the other, AIG will adjust its financial statements to call the transactions deposits rather than consolidated net premiums.
18) "The recharacterization will have virtually no impact on AIG's financial condition as of Dec. 31, 2004, but will reduce the reserve for losses and loss expenses by $250 million (euro193.15 million) and increase other liabilities by $245 million (euro189.29 million)," the company said.
19) Robert Bushman, a professor of forensic accounting at the University of North Carolina's Kenan-Flagler Business School, said he thought the departure of Greenberg was a catalyst.
20) "When you have turnover at the top, it's a good time to come clean," Bushman said. "The bad falls on the previous guy, and that kind of lets you start over."
21) Greenberg was replaced as CEO by Martin J. Sullivan, 50, who had served as vice chairman and co-chief operating officer. When named in mid-March to the post, he became just the third man to hold the post since AIG's founding in 1919.
22) AIG's statement also dealt with other accounting problems:
23) _ It acknowledged that the Richmond Insurance Company Ltd. of Bermuda was not an independent entity but a subsidiary of AIG and said accountants were trying to determine if another company, Union Excess Reinsurance Co. Ltd. of Barbados, was also a "consolidated entity."
24) _ It said transactions with Capco Reinsurance Co. Ltd. of Barbados "involved an improper structure created to recharacterize underwriting losses as capital losses" and that $200 million would be recategorized.
25) _ It plans to expense deferred compensation granted to certain AIG executives through Starr International Co. Inc., a private holding company that owns 12 percent of AIG's common stock and whose board consists of current and former AIG managers.
26) General Re, which Berkshire Hathaway acquired in 1998, has been the object of several recent reinsurance investigations, including one in which a U.S. attorney's office in Virginia has been probing Reciprocal of America, a former liability insurer of doctors, hospitals and lawyers.
27) Berkshire Hathaway, which is headquartered in Omaha, Nebraska, and General Re, which is based in Stamford, Connecticut, have been cooperating with the reinsurance investigations, the company said.


Report: Greenberg resigned amid threat that AIG would be indicted if he was at the helm
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1) Maurice Greenberg abruptly resigned as longtime chairman of American International Group Inc. amid a threat that the New York attorney general would indict AIG if he was still at the embattled company's helm as it faced growing government probes, The Wall Street Journal reported in Friday's editions.
2) The Journal, citing unnamed sources familiar with the case, said Attorney General Eliot Spitzer told AIG lawyers he was dismayed over what he called the "document caper."
3) In Bermuda last Friday, a lawyer for Greenberg, whose nickname is Hank, carted boxes of documents out of an AIG office and into a van, the sources told the Journal. The next day, lawyers hired by AIG to handle a regulatory probe discovered certain records were missing, and that an AIG employee had destroyed some computer records and tape recordings of business meetings, the sources said.
4) There was a confrontation between the lawyers for AIG and attorneys representing Greenberg over who should secure the rest of the documents, the Journal said.
5) Greenberg stepped down as chairman 48 hours after Spitzer threatened last Saturday that his office would indict AIG on Monday if action wasn't taken, the Journal said.
6) "As long as Hank's still the chairman, AIG is still accountable," Spitzer told AIG's outside lawyers on the phone last Saturday night from a Colorado skiing vacation, the Journal's sources said. "You have serious criminal exposure."
7) Some of AIG's independent directors argued Greenberg had to go immediately in order to protect the company, the Journal said. Those directors had essentially taken control of the company because of the investigations into whether AIG bolstered its financial condition with improper accounting.
8) Greenberg, 79, retired before he was forced out, the Journal reported. Through his attorney, David Boies, Greenberg declined to comment to the Journal. An AIG spokesman told the Journal the company declined to comment.


AIG chief executive seeks to assure investors on probe
(APW_ENG_20050404.0547)
1) The new chief executive officer of American International Group Inc. is trying to assure investors that the insurance behemoth is cooperating fully with regulators, who are looking into widespread accounting irregularities.
2) In a letter to shareholders released late Sunday night, CEO Martin J. Sullivan said management was working "to ensure that everyone throughout the organization complies with AIG's policy of full cooperation with all investigative efforts, both internal and external."
3) Sullivan, who was named to the top post on March 14 after the board forced the resignation of longtime CEO Maurice "Hank" Greenberg, also said AIG "has worked diligently to protect and preserve relevant documents" needed in the probe by the Securities and Exchange Commission and New York Attorney General Eliot Spitzer's office.
4) Sullivan made the statement about documents after acknowledging an earlier-reported incident in which documents were removed from an AIG building in Bermuda or destroyed. He said one Bermuda-based employee was terminated and several others resigned "for failure to cooperate with AIG's review."
5) He also emphasized that despite the investigations, AIG is not in any financial danger.
6) "It is unfortunate that current circumstances have obscured the reality that AIG's unique global franchise is sound, our financial position is solid and cash flow remains strong," Sullivan said in the letter.
7) AIG's shares have fallen nearly 30 percent since mid-February when subpoenas by the regulators were disclosed.
8) On Monday, brokerages upgraded AIG shares on grounds they had dropped too low.
9) AIG shares, which fell $4.46 on Friday, were up $1.17, or 2.3 percent, at $52.12 in Monday morning trading on the New York Stock Exchange.
10) Smith Barney raised its recommendation to "buy" from "neutral," citing the company's strong business model and what it termed the "extremely remote possibility" of criminal prosecution of the firm.
11) Morgan Stanley, meanwhile, raised AIG to "overweight" from "equal weight," primarily on valuation.
12) Meanwhile, The Wall Street Journal reported in its Monday editions that a private company that controls about 12 percent of AIG shares ousted at least seven AIG executives from its board, including Sullivan.
13) The Journal, citing unnamed people familiar with the matter, said the move by the owners of Starr International Co. _ who include Greenberg _ mean that Sullivan no longer has any say over a big portion of AIG's executive compensation program.
14) Starr International has long been used for a deferred-pay and investment plan for AIG management.
15) Regulators, as part of a broad investigation into AIG's activities, are examining whether Starr International and its cross-ownership by AIG executives pose potential conflicts of interest.
16) The most-immediate potential conflict is that AIG executives continue to rely on Greenberg, who is chairman of Starr International, for a big portion of their pay, even after Greenberg has been pushed from the firm.
17) Separating the two companies could alleviate concerns that Greenberg might be able to use his control at Starr International to wield power over AIG, The New York Times reported Monday, also citing an unnamed source.
18) The abrupt move, conveyed in letters sent last week to each AIG executive and bearing a single sentence, also removed AIG Executive Vice Chairman Donald Kanak.
19) Regulators weren't notified of the moves by the owners of Starr International, and they were immediately suspicious and planned to examine the action, the Journal said, citing a person close to Spitzer.
20) Starr International's compensation program set aside AIG shares valued at $129.6 million for AIG executives, the Journal said.
21) As of 2004 Greenberg owned 8.33 percent of Starr International's common stock, the Journal said. As many as 37 AIG executives and directors own nearly 34 percent more of Starr's shares. The ownership of the remainder isn't disclosed in public documents.
22) Starr International, a Panamanian company with its own office in Bermuda, is one of three private organizations, all named for AIG's late founder, C.V. Starr, run largely by AIG past and current insiders.


Munich Re representatives to meet New York attorney general in AIG probe
(APW_ENG_20050406.0430)
1) Representatives from Germany's Munich Re AG, the world's biggest reinsurer, are meeting with the New York attorney general's office in connection with the investigation into insurer American International Group, a company spokeswoman said Wednesday.
2) Attorney General Eliot Spitzer's office is looking into allegations of widespread accounting irregularities at AIG, though Spitzer said Monday that he believed a resolution could be reached without criminal charges.
3) Munich Re has been asked to provide information at the Wednesday meeting, spokeswoman Anke Rosumek said. She wouldn't comment further.
4) AIG's new chief executive Martin Sullivan _ who took the top post on March 14 after the board forced out longtime chief executive Maurice "Hank" Greenberg _ has said that he is cooperating fully with regulators.
5) AIG's shares have fallen nearly 30 percent since mid-February, when subpoenas by the regulators were disclosed.


Report: Documents for transaction at the center of probes were doctored
(APW_ENG_20050408.0574)
1) Documents for a reinsurance transaction that is at the center of federal and state probes into American International Group Inc. were doctored several months after the deal was struck, The New York Times reported Friday.
2) The Times, quoting unnamed "executives with direct knowledge of the transaction," said the deal was "repapered" by midlevel employees of General Re, a unit of Berkshire Hathaway.
3) The paper said the modification was detected by Berkshire Hathaway-hired lawyers doing an audit of General Re in connection with an unrelated case.
4) The Securities and Exchange Commission and New York Attorney General Eliot Spitzer are investigating the transaction, which occurred in the final quarter of 2000 and the first quarter of 2001, to determine if AIG improperly booked the deal to burnish its books.
5) AIG recently admitted that accounting for the deal was improper.
6) The former chief executive of New York-based AIG, Maurice "Hank" Greenberg, is scheduled to speak with regulators in New York on Tuesday. Billionaire investor Warren E. Buffett, who heads Berkshire Hathaway, will speak with regulators the day before.
7) Buffett is considered "a cooperating witness" and not a target of the probe, investigators told The Associated Press.
8) Greenberg was forced out as head of AIG in mid-March as allegations of accounting improprieties at the company mounted.
9) The Times said that the reinsurance transaction being investigated was initiated by Greenberg with Ronald E. Ferguson, former head of General Re.
10) Two General Re executives handled details with Christian M. Milton, who recently was fired by AIG for failing to cooperate with investigators. The two executives then passed on responsibility to John Houldsworth, head of General Re's office in Dublin.
11) "After Mr. Houldsworth was asked to manage the AIG transaction, a decision was apparently made at General Re to doctor the paperwork surrounding it," the Times said. It said that Houldsworth "oversaw the changes to the documents," quoting unnamed people with direct knowledge of the transaction.
12) AIG initially paid General Re $5 million (euro3.87 million) for services. After the "repapering," the documents made it appear that General Re paid $10 million (euro7.74 million) to AIG.
13) On Thursday, federal regulators secured a court order compelling AIG, Greenberg and a private company with ties to AIG to preserve documents and provide them to investigators.
14) An official of the SEC said the agency sought the order from the U.S. District Court in Manhattan in response to reports of documents having been removed from an AIG building in Bermuda, where the company has a subsidiary, or destroyed.
15) AIG, Greenberg and C.V. Starr & Co. Inc. consented to the order, the agency said.


NY Attorney General Spitzer says Buffett only a witness in AIG probe
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1) Billionaire investor Warren Buffett is merely a witness who could "shed light" on transactions involving the former chief executive of insurer American International Group Inc., which is now at the center of federal and state probes, New York Attorney General Eliot Spitzer said.
2) Buffett, who heads Berkshire Hathaway, will meet Monday in New York with regulators as part of an investigation by Spitzer and the Securities and Exchange Commission into allegations of accounting improprieties at AIG involving a unit of Buffett's company.
3) The company's former CEO, Maurice "Hank" Greenberg, was forced out in mid-March as those allegations mounted. Greenberg is scheduled to speak with regulators on Tuesday.
4) "We believe (Buffet) can shed light on a series of transactions that ... Hank Greenberg participated in," Spitzer said in an interview with ABC's "This Week" television program.
5) Spitzer stressed that Buffet was "not a subject or a target of our investigation," but said, "There are some ambiguities that will be hopefully addressed (Monday) in our discussion with Mr. Buffett."
6) "He is a witness in our view, and the focus of this investigation is AIG and the much broader reach of the offshore entities that AIG has created that we believe were, in many respects, fraudulent," Spitzer said.
7) Buffett was subpoenaed in January and has said he would cooperate.
8) Berkshire Hathaway did not return a call seeking comment Sunday.
9) The New York Times reported Friday that documents from a 2000 reinsurance transaction at the center of the probes had been doctored several months after the deal was struck. The newspaper cited unnamed executives with direct knowledge of the transaction, who said the deal was "repapered" by midlevel employees of General Re Corp., a unit of Omaha, Nebraska-based Berkshire Hathaway.
10) The Times said the modification was detected by attorneys Berkshire Hathaway hired to audit General Re in connection with an unrelated case.
11) In a recent television interview, Greenberg's attorney David Boies said AIG's accounting neither greatly influenced the market nor misled people.
12) "Well, obviously I disagree with that," Spitzer said Sunday. "The evidence is overwhelming that these were transactions created for the purpose of deceiving the market. We call that fraud. It is deceptive. It is wrong. It is illegal."
13) Still, Spitzer would not say an indictment was forthcoming.
14) "We have powerful evidence. We will proceed with it," he said. "It could be civil. It could be criminal."
15) Last month, AIG acknowledged that it had improperly recorded transactions with General Re that served to boost its reserves.
16) Reinsurance traditionally has been used to spread risk among insurers but, in some cases, it has been used for the questionable purpose of polishing a company's financial statements. If there is no risk transfer, the deal shouldn't be booked as insurance.
17) In the case under review, AIG purchased reinsurance from General Re in the fourth quarter of 2000 and first quarter of 2001. Investigators have said that AIG used the deals to pump up its reserves when markets were uneasy about the company's outstanding liabilities.
18) When asked whether he believed Buffet's impeccable reputation will remain intact, Spitzer replied, "I sure hope so ... Warren Buffett is an icon. He has succeeded the right way. He stands for smart, long-term investing, transparency, accountability _ all those things we value and support."


Former AIG chief gave wife 41.4 million shares before quitting company, SEC filing shows
(APW_ENG_20050413.0097)
1) Three days before he resigned as head of American International Group Inc., Maurice "Hank" Greenberg gave his wife 41.4 million of his shares in the insurance company, according to a regulatory filing.
2) The disclosure came on Tuesday, the same day Greenberg declined to answer questions posed by government investigators probing transactions at AIG.
3) AIG's board forced Greenberg, 79, to relinquish his posts as president and CEO on March 14, and he retired as the company's chairman two weeks later. Greenberg transferred the shares to his wife, Corinne P. Greenberg, on March 11, according to his filing Tuesday with the Securities and Exchange Commission. The shares are worth $2.2 billion (euro1.69 billion), based on AIG's current stock price.
4) Greenberg directly held 1.95 million shares after the transfer. In the filing, Greenberg also disclaimed ownership "and any pecuniary interest" in another 23.65 million AIG shares he held through C.V. Starr & Co. Inc., which controls AIG managers' compensation.
5) Howard Opinsky, a spokesman for Greenberg's legal team, declined to comment on the filing, as did AIG spokesman Chris Winans.
6) At Tuesday's deposition, Greenberg invoked his Fifth Amendment rights against self-incrimination in response to all questions during the 45 minute session, according to a person who attended the meeting but asked not to be identified by name.
7) "I'm told it was quiet, cordial and professional," Opinsky said after the meeting.
8) Greenberg, who arrived and exited the building via an underground tunnel, made no comments after the meeting. His lawyer had indicated on Monday that his client likely would refuse to answer questions because he had not had sufficient time to prepare.
9) Greenberg's substantial stock gift to his wife is sure to spark investigators' interest, because it appears to be an effort to shield assets, said Thomas Ajamie, a securities lawyer in Houston.
10) "All the alarms are going off, and red flags are waving, when he makes such a huge transfer at the exact same time that he's under civil lawsuit scrutiny and criminal scrutiny," Ajamie said. "This large of a transfer, even in isolation, would garner regulatory scrutiny, but in the context of the criminal and civil issues, the warning bells are waking up people from here to China."
11) Investigators who attended the Tuesday session with Greenberg in New York Attorney General Eliot Spitzer's office in lower Manhattan included members of Spitzer's staff, representatives from the Securities and Exchange Commission and lawyers from the New York state insurance department.
12) The investigators are looking into a number of reinsurance transactions booked by New York-based AIG, one of the world's largest insurers. Reinsurance traditionally has been used to spread out risk among insurers but, in some cases, has been used for the questionable purpose of polishing a company's financial statements.
13) In the transaction at the center of the probe, AIG purchased reinsurance from General Reinsurance Corp. in the fourth quarter of 2000 and first quarter of 2001. Investigators have said that AIG used the deals to pump up its reserves when markets were uneasy about the company's outstanding liabilities.
14) AIG acknowledged recently that its accounting for the transaction with Gen Re "was improper and, in light of the lack of evidence of risk transfer, these transactions should not have been recorded as insurance."
15) Billionaire investor Warren Buffett, whose holding company Berkshire Hathaway Inc. owns Gen Re, spoke with the investigators on Monday. The investigators indicated that Buffett was a "cooperating witness" while Greenberg was subpoenaed as a target in the probe.
16) Before Tuesday's session began, Joseph Fritsch, director of insurance accounting policy in the New York state insurance department, told reporters that investigators "have 40 pages of questions" for Greenberg.
17) He said that other AIG executives would likely be called for questioning, and that new information from them could result in a fresh subpoena for Greenberg.
18) Fritsch also said that Buffett a day earlier confirmed "that Hank knew about the deal" between AIG and Gen Re and that Greenberg had told a former Gen Re executive that he was disturbed about repeated questioning from Wall Street analysts over the level of AIG's reserves.
19) Fritsch quoted Buffett as saying he did not give prior approval to the transaction, leaving the decision-making to his subordinates.
20) AIG shares rose $1.10, or 2.1 percent, to close at $53.20 on the New York Stock Exchange. The stock has traded in a 52-week range of $50.15 to $77.36. Shares in Berkshire Hathaway rose $380, or 0.4 percent, to close at $87,950.
21) In a column in Tuesday's Wall Street Journal, Greenberg's lawyer, David Boies, said Greenberg had asked to postpone the questioning to allow for more time to review the documents in the case, and to limit questions to the General Re transaction. Both requests were denied, Boies said.


Insurance firm ACE continues internal investigation into finite-risk insurance
(APW_ENG_20050427.1250)
1) Evan Greenberg, president and chief executive of insurance firm ACE Ltd., said Wednesday that his insurance company's internal investigation into finite-risk insurance products is nearing completion but so far has found no accounting irregularities.
2) Greenberg, speaking on a call with analysts about the Bermuda-based firms' first-quarter earnings, said contracts studied to date appear "generally structured in a way to provide for appropriate risk transfer and accounted for properly."
3) He said the company's internal investigation "should be concluded in about a month's time."
4) ACE is among a number of insurance companies that have been subpoenaed by New York Attorney General Eliot Spitzer, the Securities and Exchange Commission and state insurance commissioners in a wide-ranging probe into these specialized insurance products.
5) Finite-risk and other reinsurance products are often used by insurance companies to share risk, but regulators have charged that some deals were used simply to burnish company finances.
6) Greenberg's father, Maurice "Hank" Greenberg, was forced out as chairman and CEO of the New York-base American International Group Inc. earlier this year in part because of questions about a reinsurance deal with Berkshire Hathaway Inc.'s General Re Corp.
7) Evan Greenberg said ACE was "continuing to cooperate fully on all the investigations."
8) Asked by an analyst if he might get caught up in the AIG probe because of his earlier employment at AIG, Greenberg said: "We have no indication that I am the focus of attention."
9) He also disclosed that an earlier internal investigation into business practices had uncovered some problems.
10) "We discovered a few examples of behavior that we would consider to be inconsistent with" ACE standards of conduct, Greenberg said. "We've taken appropriate action to ensure such conduct does not recur."
11) Greenberg gave no details, and a company spokesman said he could not elaborate on Greenberg's comments.
12) ACE was implicated, but not charged, in connection with Spitzer's probe of insurance brokers such as Marsh & McLennan Companies Inc. over bid-rigging and the use of incentive fees to steer business. A former executive of ACE Financial Solutions Inc. is among 10 insurance executives who have entered guilty pleas in the case.
13) ACE shares rose $1.87, or 4.7 percent, to close at $41.49 in Wednesday trading on the New York Stock Exchange. The stock has traded in a range between $31.80 and $47.70 in the last year.
14) In its earnings report, released late Tuesday, ACE said profits fell slightly in the first quarter, but results topped expectations when losses and gains from the sale of investments are excluded.
15) Quarterly income was $422 million (euro326.6 million), or $1.46 per share, down from $436 million, or $1.53 per share, in the year-ago period. Before the payment of preferred dividends, net income decreased to $433 million from $447 million. Excluding realized losses in the latest quarter and gains a year ago, operating earnings rose to $1.49 per share from $1.40.
16) Ace's earnings topped the average estimate of $1.46 per share from analysts surveyed by Thomson Financial.


American International Group review shows loss of $2.7 billion due to errors
(APW_ENG_20050502.0110)
1) American International Group Inc., the troubled insurance company already under federal investigation, will lower its net worth by about $2.7 billion (euro2.08 billion), $1 billion (euro0.77 billion) more than an earlier estimate.
2) In a statement Sunday, the company said it will restate its results from 2000 and delay filing its 2004 annual report for the third time in six weeks. Independent auditors PricewaterhouseCoopers LLP is examining the firm's books.
3) Martin Sullivan, AIG's president and chief executive officer said in the statement that the company is "working diligently" to complete a new filing and that they will assure "accurate financial statements, rigorous accounting, greater transparency and thorough disclosure."
4) Calls to AIG's corporate offices went unanswered on Sunday.
5) The $2.7 billion (euro2.08 billion) overstatement represents a decrease of approximately 3.3 percent in AIG's unaudited consolidated shareholders' equity of $82.87 billion (euro64 billion). The firm also said incorrect accounting on derivatives will increase shareholders' equity by an estimated $2.4 billion (euro1.85 billion).
6) Maurice "Hank" Greenberg resigned as president and CEO of the New York-based insurer on March 14. Greenberg was replaced as CEO by Martin J. Sullivan, 50, who had served as vice chairman and co-chief operating officer.
7) Federal regulators are investigating a reinsurance transaction between AIG and Berkshire Hathaway Inc.'s subsidiary General Re that appeared to boost AIG's reserves when markets were uneasy about the company's outstanding liabilities. AIG has acknowledged that its accounting for the transaction was improper.


American International Group review to result in $2.7 billion equity adjustment
(APW_ENG_20050502.0610)
1) American International Group Inc., one of the world's largest insurance companies, announced that it will again delay filing its 2004 annual report and make accounting adjustments that will cut its value by some $2.7 billion (euro2.1 billion) _ $1 billion (euro780 million) more than an earlier estimate.
2) Shareholders, apparently relieved that New York-based AIG is dealing with problems that have drawn regulatory scrutiny, bid the company's shares up. AIG shares rose $2.92, or nearly 6 percent, to $53.77 in morning trading on the New York Stock Exchange.
3) But Fitch Ratings agency downgraded AIG's long-term credit rating to AA from AA-Plus and kept the company on its credit watch negative list.
4) Fitch analyst Julie A. Burke said the downgrade was in response to "the additional delay as well as the slightly higher number with regard to accounting restatements."
5) In a statement late Sunday, the company said it will restate its results for the years 2000 to 2003 and delay filing its 2004 annual report until "no later than May 31." The company had twice earlier delayed filing its Form 10-K with the Securities and Exchange Commission.
6) AIG said the review by a team of independent auditors as well as its outside audit firm, PricewaterhouseCoopers LLP, was "nearing completion."
7) It said in the statement that AIG expects PricewaterhouseCoopers to give it "unqualified audit opinions" on its revised, consolidated financial statements. But it said that PwC would likely issue an "adverse option with respect to AIG's internal control over financial reporting."
8) The company admitted in its statement that some of the accounting problems were the result of mismanagement.
9) "As a result of its internal review, AIG management has identified certain control deficiencies, including the ability of certain former members of senior management to circumvent internal controls over financial reporting in certain instances," the statement said. It also acknowledged "ineffective controls" for accounting for certain transactions.
10) Although the reduction in shareholder value of $2.7 billion (euro2.1 billion) is among the highest ever recorded by a company, it represents just 3.3 percent of the insurance giant's $82.87 billion (euro64.43 billion) in shareholder equity as of last Dec. 31.
11) The latest statement expands on a previous report issued March 30 in which AIG delayed its annual report and acknowledged a series of accounting problems, including an admission it had improperly booked transactions with General Re, a unit of Berkshire Hathaway Inc., that artificially boosted its reserves.
12) Federal regulators are investigating the reinsurance transaction.
13) AIG earlier said that its purchase of reinsurance from General Re in the fourth quarter of 2000 and the first quarter of 2001 was improperly booked as insurance.
14) The broadening investigation led AIG to oust longtime chief executive officer, Maurice "Hank" Greenberg, earlier this year.
15) Martin Sullivan, named AIG's president and CEO after Greenberg's ouster, said in the statement issued Sunday that the company is "working diligently" to complete a new filing and that they will assure "accurate financial statements, rigorous accounting, greater transparency and thorough disclosure."
16) In the latest report, AIG said that among the accounting adjustments and corrections that will reduce its value were:
17) _ $1.2 billion (euro930 million) for incorporating the reinsurance activities of Union Excess Reinsurance Company Ltd. as deposits on its books, acknowledging its "ownership interests" in the Barbados-based company.
18) _ $300 million (euro233 million) for its Domestic Brokerage group, saying that allowances for doubtful accounts "were not properly recorded in the consolidated financial statements."
19) _ $100 million (euro77.7 million) for accounting for so-called life settlements, which are ways to help elderly people pull money from their policies.
20) _ $200 million (euro155.5 million) for "the incorrect application of accounting principles" related to deferred acquisition costs.
21) AIG also said that it would bring accounting for its hedging activities in line with accepted standards, resulting in a $2.4 billion (euro1.9 billion) increase in shareholders' equity.


Report: Former AIG chief called target of stock inquiry
(APW_ENG_20050506.0674)
1) U.S. prosecutors are investigating whether the former chief executive of American International Group headed an effort to manipulate the company's stock price in his final weeks as CEO of one of the world's largest insurance firms, the New York Times reported Friday.
2) The Times, citing unidentified people officially briefed on the inquiry, said an executive with the company's trading group told the company late last week that he had talked with former CEO Maurice R. Greenberg about AIG's stock price in February, when it had begun to fall sharply.
3) People who listened to a recording of the conversations say Greenberg can be heard instructing the trader to buy shares of AIG, the newspaper said. Such purchases may violate federal securities law.
4) The conversations between the trader and Greenberg were captured on a recording system used by the trading division, the sources said. The recordings were reviewed by the company and its lawyers, and then turned over to prosecutors with the U.S. attorney's office in Manhattan and the Securities and Exchange Commission.
5) Federal prosecutors have since subpoenaed all of AIG's recordings from its trading group, which are said to date back as much as two years, the sources said.
6) Megan Gaffney, a spokeswoman for federal prosecutors in Manhattan, said Friday the office had no comment.
7) Since the beginning of the year, federal and state officials have been examining transactions AIG used to make its financial position appear stronger than it really was.
8) Greenberg remains a focal point in the investigation despite being forced to step down as head of the company. Greenberg, who turned 80 on Wednesday, resigned as chief executive of AIG on March 14 and as chairman later that month.
9) "We cannot comment because we don't have the tapes, transcripts nor the substance of the conversation contained on them," Howard Opinsky, a spokesman for Greenberg's legal team told the Times.
10) Greenberg has not been accused of wrongdoing by regulators, but he has previously been investigated in connection with possible market manipulation.
11) The SEC, the New York attorney general's office, the New York Insurance Department and the Justice Department have been examining Greenberg's role in initiating a transaction with General Re, a reinsurance subsidiary of Berkshire Hathaway Inc., that allowed AIG to bolster reserves artificially against future claims _ an important measure of an insurer's strength.
12) AIG said in late March that it did not account correctly for that transaction and others. An AIG spokesman declined to comment to the Times Thursday on the latest investigation. The company is cooperating with all inquiries.


AIG files annual report, acknowledges accounting improprieties
(APW_ENG_20050531.1281)
1) American International Group Inc., the huge insurance company under investigation by state and federal regulators over accounting issues, filed its long-awaited 2004 annual report with the Securities and Exchange Commission on Tuesday, restating financial results for the past five years.
2) As part of the restatement, AIG cut shareholders' equity at Dec. 31, 2004 by $2.26 billion (euro1.83 billion), or 2.7 percent, to $80.61 billion (euro65.37 billion), less than the $2.7 billion (euro2.19 billion) reduction the company had projected earlier. This included an after-tax reduction of $1.19 billion (euro970 million) for changes in estimates for the fourth quarter of 2004.
3) Revised calculations by the New York-based company lowered AIG's profits by nearly $4 billion (euro3.24 billion) for the five years since 2000. The biggest of those changes came in 2004, with net income cut by $1.32 billion, or nearly 12 percent, to $9.73 billion (euro7.89 billion) from the $11.05 billion (euro8.96 billion) that had been reported on Feb. 9.
4) In its new filing with the SEC, AIG acknowledged accounting improprieties, including "improper or inappropriate transactions."
5) It also said: "In many cases, these transactions or entries appear to have had the purpose of achieving an accounting result that would enhance measures believed to be important to the financial community and may have involved documentation that did not accurately reflect the true nature of the arrangements."
6) In some instances, the filing said, the transactions "may also have involved misrepresentations to members of management, regulators and AIG's independent auditors."
7) Moody's Investors Service confirmed its long-term senior debt ratings on AIG at Aa2 based on the report and revised its outlook to "stable." Fitch Ratings termed AIG's filing "a modest positive development" but kept the company's debt on negative ratings watch because of "significant short-term and longer term uncertainties."
8) AIG shares fell 85 cents, or 1.5 percent, to close at $55.55 on the New York Stock Exchange. Its shares have traded in a 52-week range of $49.91 to $74.98.
9) Analysts said investors may have been concerned with AIG's announcement that it was boosting its reserves for asbestos cases by $850 million (euro689.32 million) and would commission "a comprehensive independent actuarial review" of reserves for property-casualty operations.
10) AIG's chief executive, Martin J. Sullivan, told analysts on a conference call that "we're comfortable that our reserves are reasonable," and said the independent review "would really help our judgments going forward."
11) But Paul Newsome, an insurance analyst with A.G. Edwards & Sons Inc. in St. Louis, Missouri, said that "whenever a company says they're going to do an independent review of reserves, you typically think the reserves need to be increased." An increase in reserves generally reduces earnings.
12) John Elliott, dean of the Zicklin School of Business at Baruch College in New York, said it's not unusual for a company "caught in the spotlight" to look at issues like reserves.
13) "New management obviously wants sins of the past fixed," Elliott said. "But there's also the attitude of, 'I want to do everything I can to be sure that any lurking issues _ and these could include fair-judgement issues like reserves _ get resolved."
14) Last week, New York regulators filed a civil lawsuit against AIG and the company's former chief executive officer, Maurice "Hank" Greenberg, and former Chief Financial Officer Howard I. Smith, saying they orchestrated an accounting scheme that made AIG's financial picture appear brighter than it was, misleading both investors and regulators.
15) In the suit, New York Attorney General Eliot Spitzer accused the company and the former executives of using "deception and fraud" to boost the company's stock price.
16) Greenberg, 80, resigned as chief executive officer and chairman of AIG in March, ending nearly 40 years at the helm of the insurance company. Smith was fired later for failing to cooperate with investigators.
17) There was no immediate comment from Greenberg's legal team on the AIG report.
18) Sullivan, who replaced Greenberg as president and chief executive officer, said in a statement earlier Tuesday that the company "continues to cooperate to the fullest possible extent" with investigators.
19) He added: "AIG's financial position is sound, our insurance cash flow is strong and our global franchise is unmatched."
20) Sullivan said the company, with 92,000 workers worldwide, had embarked on "a new era" that would improve the way the company operates and contribute to future growth.
21) AIG's internal review into accounting errors was conducted in consultation with its independent public accounting firm, PricewaterhouseCoopers LLP, as well as with the law firms Paul, Weiss, Rifkind, Wharton & Garrison LLP and Simpson Thacher & Bartlett LLP.
22) AIG said it expects to file its financial report for the first quarter of 2005 by the end of June.


Company led by ex-AIG chief says insurer severed ties, cannot control $19 billion in stock
(APW_ENG_20051018.0071)
1) An Irish-based company led by Maurice R. Greenberg, the former chief executive of American International Group Inc., is the rightful owner of more than $19 billion (euro15.8 billion) in AIG stock because it has no ties to the insurance giant, according to court papers.
2) In written arguments filed Monday in U.S. District Court in Manhattan, Starr International Co. Inc. asked a federal judge to find that it is not affiliated with AIG and is entitled to retain 310.7 million shares, or 12 percent of AIG stock.
3) AIG, the nation's largest insurer, filed papers in the case last month accusing Starr International of breach of contract and unjust enrichment. It demanded that the shares be returned.
4) Starr International acknowledged that it has for the past 30 years operated a series of separate two-year programs providing bonus and long-term incentive compensation to as many as 700 executives of AIG and its subsidiaries.
5) It said the latest program benefited fewer than 1 percent of AIG employees and that Starr International had paid out less than 4 percent of its AIG stock during the three decades. It said it never promised to keep the programs going indefinitely.
6) Starr International was named after Cornelius Vander Starr, who created a worldwide network of insurance companies in the early 1900s. Starr International said it has remained a privately held company since its incorporation under the laws of Panama in 1943. It is based in Dublin, Ireland.
7) It said it has set aside 23 million shares of its AIG stock to benefit participants in the bonus programs who would be entitled to own those shares at age 65. It said it has been unable to transfer some of those shares lately without assurance from AIG that it is not an AIG affiliate.
8) Starr International said AIG has taken actions to demonstrate that Starr International is no longer an affiliate, including unlawfully holding fine art, business records and other property belonging to Starr International.
9) The company said Greenberg's resignation as AIG's chief executive and the circumstances which led to it eliminated any possibility that Starr International is controlled by AIG.
10) The litigation began when Starr International filed a lawsuit demanding the return of $15 million (euro12.5 million) in art it had allowed AIG to display in its offices before Greenberg was forced out in March. Greenberg resigned as CEO and chairman of the company amid widening federal and state probes of accounting irregularities.
11) In May, AIG restated financial results for the last five years, lowering its profits by nearly $4 billion (euro3.33 billion) and acknowledging accounting improprieties, including "improper or inappropriate transactions," some apparently intended to deceive regulators.


AIG reports $1.7 billion in third-quarter profits despite hurricane losses
(APW_ENG_20051114.1180)
1) American International Group Inc., one of the world's largest insurers, said on Monday profits fell to $1.72 billion (euro1.47 billion) for the third quarter, in line with an earlier announcement.
2) The earnings report, which had been delayed as the New York-based company grappled with a restatement of financial results back several years, said the company absorbed catastrophe-related losses in the quarter of $1.6 billion (euro1.37 billion), most from Hurricane Katrina.
3) The net income translated to 65 cents a share and compared with profits of $2.69 billion, or $1.02 a share, a year earlier.
4) Analysts surveyed by Thomson Financial had projected profits at 78 cents a share.
5) The earnings were announced after the stock market closed. AIG's shares had advanced 26 cents to $67.50 in regular trading. In after-hours trading, its shares dropped 30 cents to $67.20. The stock hit a 52-week low of $49.91 in the spring.
6) AIG had projected third-quarter earnings of about $1.7 billion (euro1.45 billion) last Wednesday, when it announced that it was delaying the report so it could also restate earlier financial results for fiscal years 2002, 2003 and 2004 to correct accounting errors.
7) The restatement, which the company said also would affect some financial statements from 2001 and 2000, was the second this year.
8) In late May, AIG restated five years of results, cutting shareholders' equity by $2.26 billion (euro1.93 billion), after New York Attorney General Eliot Spitzer launched an investigation into whether the company was using accounting tricks to boost its stock.
9) The company said in a filing Monday with the Securities and Exchange Commission that the second round of accounting adjustments related primarily to accounting for derivatives, reserves and allowances in its domestic brokerage group, income tax accounting and accounting for payments from aircraft and engine manufacturers.
10) The adjustments had a positive impact on AIG's balance sheet, raising retained earnings to $73.25 billion (euro62.54 billion) at the end of the third quarter, some $490 million (euro418.34 million) higher than they would have been without the restatement.
11) For the first nine months of the year, profits were $10.02 billion (euro8.55 billion), or $3.82 a share, up from $8.3 billion, or $3.14 a share, in the first nine months of 2004.
12) In a statement accompanying the earnings report, AIG President and Chief Executive Martin J. Sullivan said it was notable that the company reported a profit in the July-September period despite "the most costly quarter for catastrophes ever recorded by the property-casualty industry."
13) The results through September were "a true reflection of the size, scope, diversity and financial strength" of AIG's business, he said.
14) Sullivan also said AIG would continue to offer insurance to hard-hit hurricane areas despite the probable reduction of reinsurance coverage. Reinsurance is purchased by insurance companies to help spread policy risk.
15) "We are working to provide insurance coverage to those involved in the rebuilding and recovery efforts, and we have the capacity to do so," he said. "Although reinsurance capacity could be constrained in the near future, AIG has the capital and financial resources to respond to our customers' needs."
16) The accounting issues surfaced in the spring, as federal and state regulators began investigating the industry's accounting practices and certain transactions AIG conducted with other insurers.
17) Those probes led to the ouster of former Chairman and Chief Executive Maurice "Hank" Greenberg and a civil lawsuit by Spitzer in May. The suit against AIG and Greenberg alleged "deception and fraud" in the accounting as a way to boost the company's financial results and stock price. Greenberg has repeatedly denied wrongdoing.


NY Attorney's office: More civil claims 'possible' against AIG's former boss
(APW_ENG_20051125.0758)
1) Additional civil charges against former American International Group Inc. Chairman and CEO Maurice "Hank" Greenberg are possible, but no state criminal charges are expected, a spokesman for New York Attorney General Eliot Spitzer said Friday.
2) "The office decided months ago to pursue the case as a civil matter," said Spitzer spokesman Darren Dopp when asked if criminal charges were possible.
3) "An amendment to the civil complaint is possible, but no final decision has been made," Dopp said Friday.
4) On Friday, The Wall Street Journal reported that a person familiar with the matter said Spitzer is expected to add to his civil complaint against Greenberg as early as next week.
5) Criminal charges are still possible, however, from federal prosecutors in two separate investigations of Greenberg, the newspaper reported. Greenberg's attorney already has argued against any charges to the federal prosecutors, the newspaper reported, citing two knowledgeable sources.
6) Spokesmen for Greenberg's lawyer wouldn't comment in the report. Greenberg's attorney and AIG spokesmen were unavailable Friday to return calls requesting comment.
7) Spitzer's spokesman says the decision months ago not to pursue criminal charges is not a retreat, but rather the result of choosing to pursue action as a civil case.
8) Spitzer, who is running for New York governor in 2006, suffered a setback in his attempts to reform the mutual-fund industry in June when a jury acquitted former Bank of America Corp. broker Theodore C. Sihpol III of 29 counts of improperly trading mutual-fund shares after hours and couldn't come to a decision on four other charges.
9) Spitzer dropped another set of criminal charges on Monday in his mutual-fund trading investigation.
10) The suit against AIG and Greenberg alleged "deception and fraud" in the accounting as a way to boost the company's financial results and stock price. Greenberg has repeatedly denied wrongdoing. Greenberg ran the company for 38 years.
11) In late May, AIG restated five years of results after Spitzer began investigating whether the company was using accounting tricks to boost its stock. Adjustments earlier this month had a positive impact on AIG's balance sheet, raising retained earnings some $490 million (euro416 million) higher as of Sept. 30.
12) The accounting probes led to the ouster of Greenberg and a civil lawsuit by Spitzer in May.


New York Attorney General Spitzer says Greenberg shorted a foundation by $6 billion
(APW_ENG_20051215.0114)
1) New York Attorney General Eliot Spitzer on Wednesday accused embattled insurance executive Maurice R. "Hank" Greenberg of participating in a series of financial transactions 35 years ago that cost the charitable foundation of his mentor $6 billion (euro5 billion).
2) Spitzer's allegations were contained in a letter delivered Wednesday to the president of The Starr Foundation. They represent the latest escalation of his battle with Greenberg, who resigned in March as the chairman and chief executive of American International Group Inc. amid widening federal and state probes of accounting irregularities at the world's largest property and casualty insurance company.
3) The Starr Foundation's 2003 tax return filed with the Internal Revenue Service listed assets of $3.6 billion (euro3 billion), made up mostly of shares in AIG, and showed that it made more than $188 million (euro156.4 million) in charitable donations that year. The bulk of those were grants to colleges and tuition payments made for students.
4) The attorney general urged the foundation to take civil action against Greenberg and suggested he would do so if they don't act by the end of January to recover the assets and reconstitute its board "to guarantee it the independence needed to advance its charitable mission into the future."
5) Spitzer alleged in the letter that records obtained by court order from AIG's Bermuda offices show that three transactions in 1969 and 1970 were rife with conflicts of interest that harmed the interests of the charitable foundation.
6) "Mr. Greenberg directed a series of transactions that deprived The Starr Foundation of billions of dollars in assets," said Spitzer spokesman Darren Dopp. "Whether that improper conduct occurred yesterday or years ago doesn't matter. There is no sunset on fiduciary obligations."
7) In a statement, Greenberg and three other living executors of the estate said the transactions were approved nearly 30 years ago by the New York Attorney General's Office, the Internal Revenue Service and the state courts when the estate was closed.
8) "Each of us fulfilled our duty to Mr. Starr and the foundation without compensation and in accordance with his wishes and the law," the statement said. "Mr. Spitzer's attempt to infer improper intent _ 37 years after the events in question, on a record eroded by time and long after the statute of limitations has expired _ is absurd and politically suspect."
9) Spitzer said Greenberg was an executor of the estate of his mentor, Cornelius Vander Starr, who created a worldwide network of insurance companies including AIG in the early 1900s. Starr died Dec. 20, 1968 and Greenberg was one of the executors of the estate, according to Spitzer's letter.
10) In 1969 and 1970, the estate sold Starr's shares in American International Underwriters Far East Inc., C.V. Starr & Co. Inc. and Starr International Co. The shares were purchased by C.V. Starr & Co. Inc. and Starr International Co., which were owned and controlled by Greenberg and other close associates of Starr, according to the letter.
11) Spitzer claimed the executors of the estate sold the stock at low prices, then C.V. Starr & Co. Inc. and Starr International Co. sold them at much higher prices to AIG, enriching the Starr companies and the executors at the expense of the foundation, Spitzer said.
12) Greenberg remains in control of the Starr companies and is chairman of the board of the foundation, Spitzer said. The value of the shares in those years-old transactions have the equivalent value today of more than $6 billion (euro5 billion) and Spitzer suggests those funds rightfully belong to the foundation.
13) The foundation issued a statement disagreeing with Spitzer's findings.
14) "While The Starr Foundation respects the authority of the attorney general to supervise charitable foundations and to investigate alleged improprieties, the foundation is concerned that allegations concerning a judicial proceeding closed more than 25 years ago and the negative publicity attendant thereto may adversely affect the value of the assets of the foundation, without discernible purpose," the foundation said.
15) In recent Securities and Exchange Commission filings, Greenberg describes Starr International as a holding company for interests in commercial real estate, a private golf club and manager of an investment portfolio.
16) AIG's most recent proxy statement listed Starr International as the owner of 310.9 million, or almost 12 percent, of AIG's shares. The value of those shares was $20.6 billion (euro17.14 billion) based on Wednesday's closing stock price.
17) Control of Starr International, which also previously operated a deferred compensation profit participation plan for the benefit of AIG executives, is currently the subject of a legal battle between AIG's board of directors and Greenberg.
18) Spitzer said the relevant documents outlining the 1969 and 1970 transactions were removed from AIG's Bermuda office in late March by Greenberg's layers. Spitzer later received the records by court order.
19) Spitzer, who is running for New York governor, explained his interest in the years-old transactions by saying state law makes the Attorney General's Office responsible for ensuring that the beneficiaries of charitable foundations derive the full and fair value of foundation assets.
20) In their statement, Greenberg and the executors added: "The people of New York deserve an attorney general who is intent on fighting crime and solving the state's problems, not harassing its citizens and philanthropic organizations."


US government expected to announce $1.6 billion settlement with AIG
(APW_ENG_20060208.1385)
1) Federal and state regulatory authorities are expected to announce a $1.6 billion (euro1.34 billion) settlement on Thursday with American International Group Inc., which has been accused of involvement in an insurance bid-rigging case and the use of deceptive accounting practices, according to people familiar with the settlement terms.
2) The settlement will be split by the Securities and Exchange Commission, which will receive about $800 million (euro669.57 million) to compensate injured investors, and New York regulators who brought a civil case against AIG last summer.
3) Chris Winans, a spokesman for AIG, said the company had no immediate comment.
4) Details of the settlement were disclosed Wednesday afternoon on The Wall Street Journal's Web site.
5) AIG, one of the world's largest insurers, was accused by New York Attorney General Eliot Spitzer last May of using unacceptable accounting tactics to make the company's financial performance appear better than it was, misleading both investors and regulators. The New York State Insurance Department also was involved in the investigation.
6) In addition to naming AIG, the suit also alleged that AIG's former CEO, Maurice "Hank" Greenberg, and former chief financial officer, Howard I. Smith, orchestrated the scheme.
7) Greenberg, who resigned from AIG in March, has repeatedly insisted that he followed proper accounting procedures during his 38 years at the helm of AIG. Smith, too, has denied wrongdoing, and neither of the men were involved in the negotiations with the SEC and Spitzer.
8) The settlement is believed to be one of the largest regulatory settlements with a single company.
9) Last year, Spitzer reached an $850 million (euro711.42 million) agreement with Marsh & McLennan Companies Inc. to settle bid-rigging and price fixing allegations. AIG was among the companies that allegedly participated in the scheme, and several former AIG employees have been among a dozen insurance executives who have entered guilty pleas in the case.
10) The SEC has not filed charges against AIG; it is expected to file and settle allegations of accounting fraud with the company simultaneously, The Wall Street Journal reported.
11) Kathleen Shanley, an analyst with Gimme Credit, said a settlement would represent "a positive milestone" in AIG's efforts to resolve its past issues.
12) Greenberg was replaced as chief executive by Martin Sullivan, who oversaw the restatement of AIG's earnings back to 2000. The revisions knocked some $2 billion (euro1.67 billion) off shareholders' equity and nearly $4 billion (euro3.35 billion) off its profits.
13) "Under the new senior management team, the company has taken steps to restore confidence in its operations, and I view the announcement of a formal settlement as another step along the path to putting these issues behind it," Shanley said.
14) She noted that while $1.6 billion (euro1.34 billion) was a large sum, AIG is a large company. AIG reported earnings of $1.7 billion (euro1.42 billion) in the third quarter last year after absorbing $1.6 billion (euro1.34 billion) in hurricane losses, mainly from Katrina.
15) AIG's shares rose strongly after word of the settlement began circulating, closing up 58 cents, or nearly 1 percent, at $66.38 Wednesday on the New York Stock Exchange. They've traded in a range of $49.91 to $73.80 over the past 52 weeks.


U.S. government announces $1.64 billion settlement with AIG
(APW_ENG_20060210.0153)
1) American International Group Inc., one of the world's largest insurance companies, has agreed to pay $1.64 billion (euro1.37 billion) to resolve allegations that it used deceptive accounting practices to mislead investors and regulatory agencies.
2) The deal _ believed to be the biggest concluded by regulators with a single company _ also requires the New York-based firm to adopt changes in its business practices that will ensure proper accounting procedures in the future.
3) AIG said in a statement that the settlement was approved by its board "in the best interest of the company."
4) The pact announced Thursday settles a civil lawsuit filed last May by New York Attorney General Eliot Spitzer with backing from the New York State Insurance Department and the U.S. Justice Department. The Securities and Exchange Commission, which also worked with Spitzer on the investigation, filed and settled allegations of accounting fraud with the company simultaneously.
5) The settlement does not cover Maurice "Hank" Greenberg, the company's former chairman and chief executive who was named in the suit but who has pledged to fight it in court.
6) While acknowledging the civil misconduct and facing a huge fine, AIG at the same time escapes the threat that a criminal case could have been brought.
7) The Justice Department said that AIG's agreement spares the company criminal prosecution in exchange for its cooperation with the ongoing federal criminal investigation.
8) Shareholders welcomed the announcement, sending AIG shares up 74 cents, or 1.1 percent, to close at $67.12 Thursday on the New York Stock Exchange.
9) AIG said that under the settlement it will pay $800 million (euro668 million) for investors who were deceived by AIG's accounting tactics, including a $100 million (euro83.5 million) penalty to the SEC. In addition, it will pay $375 million (euro313 million) to AIG policyholders, $344 million (euro287 million) to states harmed by AIG's practices from 1986 to 1995 involving state workers' compensation funds, and fines of $100 million (euro83.5 million) to the state of New York and $25 million (euro21 million) to the U.S. Justice Department.
10) AIG said it would take a $1.15 billion (euro960 million) after-tax charge in its upcoming fourth-quarter earnings report to cover the settlement. It also announced that it would take a $1.1 billion (euro920 million) after-tax charge to increase its reserves to reflect the completion of a recently concluded internal risk study.
11) AIG said that as part of the deal, it also has agreed "to retain for a period of three years an independent consultant who will conduct a review" of the company's accounting and internal controls.


Four U.S. insurance industry executives plead not guilty to fraud charges
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1) Four former top executives of insurance giants General Re and American International Group pleaded not guilty to federal fraud and conspiracy charges Thursday and pledged $1 million (euro840,000) in bond each as their trial was set for May.
2) The Justice Department has accused the four of orchestrating an audacious fraud, putting together a sham reinsurance transaction that allowed AIG to falsely report some $500 million (euro422 million) in reserves against losses and thereby mislead shareholders, Wall Street and regulators. The charges against the executives come as the government's investigation of the insurance industry widens.
3) The alleged conspiracy, using phony contracts and a secret side deal, was designed to make it appear that AIG's loss reserves were growing so as to inflate the company's stock price in 2000 and 2001, prosecutors say.
4) Appearing in federal court in Alexandria were: Ronald Ferguson, who was chief executive of Berkshire Hathaway Inc.'s General Re; Elizabeth Monrad, its former chief financial officer; Robert Graham, the company's former assistant general counsel; and Christian Milton, who ran the reinsurance division of AIG.
5) By turns, they stood before U.S. District Judge Gerald Bruce Lee and replied "Not guilty" when asked how they were responding to the charges. They also said they wanted a jury trial rather than a hearing with only a judge.
6) Each pledged a $1 million bond and surrendered his or her passport. Lee set a trial date of May 22, saying it likely would last about 16 days.
7) Each defendant, if convicted on all 13 criminal counts of conspiracy, fraud and making false statements to the Securities and Exchange Commission, could face a maximum 95 years in prison and $7.75 million (euro6.54 million) in fines.
8) New York-based AIG, one of the world's largest insurance companies, last week agreed to pay a record $1.64 billion (euro1.38 billion) in a settlement with federal and New York state authorities. It also apologized for having deceived investors and regulators with misleading accounting practices.
9) AIG was alleged to have taken part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phony insurance deals to burnish its earnings and misstated the amounts of workers' compensation premiums it had collected.
10) The company's ousted chief executive, Maurice "Hank" Greenberg, remains under investigation by the Justice Department and the SEC, and has been named in a civil lawsuit by New York Attorney General Eliot Spitzer.
11) Greenberg, though not named, is referred to as "AIG unindicted co-conspirator 1" and portrayed as playing a role in the sham transaction in the indictment handed up this month by a federal grand jury in Norfolk, Va.
12) Greenberg has denied any wrongdoing. He has said that transactions made during his 38 years at the helm of AIG were proper and correctly accounted for, and his spokesman says he will be vindicated in the courts.
13) Ferguson, Monrad, Graham and Milton also are named in a related civil lawsuit by the SEC alleging that they aided AIG's alleged securities fraud.
14) General Re parent Berkshire Hathaway, an investment company based in Omaha, Nebraska, is led by influential billionaire Warren Buffett.
15) Prosecutors say AIG had been concerned about Wall Street analysts' suggestions that it had insufficient reserves to cover potential losses and approached General Re to facilitate a deal that would increase its loss reserves on paper. But the deal had no substantive value, did not transfer risk, and was designed to cosmetically alter AIG's books, according to the indictment.
16) "While the $500 million boost to AIG's reserves may have been good reading, it was pure fiction," Assistant U.S. Attorney General Alice Fisher said at a news conference announcing the indictment.
17) "The investigation absolutely is continuing," she said.
18) Two other former executives of Stamford, Connecticut-based General Re _ John Houldsworth and Richard Napier _ pleaded guilty in June to roles in the sham deal. As part of their plea bargains, they have been aiding the investigation.


AIG reports 16 percent decline in earnings
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1) American International Group Inc., one of the world's largest insurance companies, said Wednesday its net income fell nearly 16 percent in the first quarter from a year earlier despite strong performance in its general insurance unit.
2) The New York-based company said net income in the January-March period totaled $3.2 billion (euro2.5 billion), or $1.22 a share, down from $3.8 billion, or $1.45 a share, a year earlier.
3) Excluding net realized investment gains and losses and accounting changes, AIG said profit was $3.38 billion (euro2.64 billion), or $1.29 a share, in the first quarter, up nearly 5 percent from adjusted income of $3.23 billion, or $1.23 a share, a year earlier.
4) Analysts surveyed by Thomson Financial had projected earnings of $1.36 a share.
5) Revenue for the quarter was $27.3 billion (euro21.36 billion), about the same as the year-earlier figure and above the $23.3 billion (euro18.23 billion) projected by the analysts.
6) The results were announced after the close of the trading day. AIG's shares rose 33 cents to close at $66.54 on the New York Stock Exchange. They fell $2.43, or 3.6 percent, to $64.11 in after-hours trading.
7) AIG shares have traded in a range of $51.72 to $71.09 in the past 52 weeks.
8) President and Chief Executive Martin J. Sullivan said in a statement accompanying the report that the first-quarter results were reduced by several one-time charges, including $115 million related to restructuring the company's pension program.
9) "We had record general insurance results," he said. "Both domestic and foreign general insurance had outstanding results."
10) Operating income in the general insurance division was $2.33 billion (euro1.82 billion), up 42 percent from $1.64 billion in the year-earlier quarter.
11) Income in the life insurance and retirement services unit was $2.56 billion (euro2 billion) in the first quarter, up from $2.2 billion a year earlier. But income was down in the asset management unit, and financial services reported a loss of $159 million (euro124.42 million) after an accounting adjustment for derivatives and hedging activities.
12) The company has been struggling with accounting issues since its longtime chief executive, Maurice "Hank" Greenberg, was ousted in March 2005 amid allegations AIG used deceptive accounting practices to mislead investors and regulators. AIG settled with regulators last February by agreeing to pay $1.64 billion (euro1.28 billion) in penalties.
13) AIG has twice restated earnings back to 2000.


AIG uses subsidiaries to contribute beyond limit to candidates
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1) Major corporations based in New York such as American International Group Inc. have legally contributed many times more than the corporate limit to political candidates who regulate their businesses, state and good-government officials said Tuesday.
2) In the case of AIG, the insurance giant is limited to giving $5,000 (euro3,951) to a candidate. But the parent company used 33 subsidiaries in recent years to give $335,000 (euro264,738) to three-term Republican Gov. George Pataki; $50,000 (euro39,513) to Attorney General Eliot Spitzer, the Democratic front-runner for governor; and $25,000 (euro19,757) to Democratic Comptroller Alan Hevesi, according to Tuesday's editions of The New York Times.
3) "That happens all the time," said Rachel Leon of New York-Common Cause, which for years has lobbied to reform this and other campaign finance practices.
4) "It's just one of the many loopholes that make our campaign finance laws meaningless," she said Tuesday. "We might as well not have any limits because in the real world, they don't apply."
5) "As far as I can see, it's within the parameters of our law," said Lee Daghlian, a spokesman for the state Board of Elections, of the AIG contributions. "We are not looking at anything."
6) The corporate limits were created in the mid-1970s and set at $5,000 (euro3,951) to restrict the influence of companies on candidates, he said.
7) AIG spokesman Joe Norton did not immediately respond to a request for comment Tuesday. Norton told the Times that the donations by subsidiaries, many of them in sequentially ordered checks drawn from a common account, are charged back to the subsidiaries. He said AIG usually recommends the candidates to receive donations.
8) The contributions in 2003 to Spitzer, the two-term attorney general, were made before Spitzer investigated AIG and its then CEO, Maurice "Hank" Greenberg. AIG, one of the world's largest insurance companies, announced in February that it would pay $1.64 billion (euro1.3 billion) to resolve allegations that it used deceptive accounting practices to mislead investors and regulatory agencies.
9) The settlement did not cover Greenberg, who resigned in March 2005 and is fighting Spitzer in court.
10) Another major concern of Common Cause is companies that are organized as limited liability corporations. The LLCs aren't subject to the $5,000 (euro3,951) corporate limit, but instead are treated as individuals and may contribute as much as $50,100 (euro39,592) to a candidate.
11) "Both loopholes are just another example of how New York campaign finance law is almost completely useless," said Common Cause's Liam Arbetman.


AIG elects former Citigroup president, COO Robert Willumstad as chairman
(APW_ENG_20060920.1170)
1) Robert B. Willumstad, who left Citigroup Inc. after being passed over for the top management job, has been selected as the new chairman of the board of American International Group Inc., one of the world's largest insurance companies.
2) AIG said Wednesday that Willumstad, 61, will succeed Frank G. Zarb, who has been interim chairman since April 2005.
3) Willumstad, who had been president and chief operating officer of Citigroup, announced in July 2005 that he was leaving the nation's largest bank to seek the top job at a public company. He resigned after Charles Prince was named chief executive, replacing the retiring Sanford Weill; Prince later also was given the title of chairman.
4) Zarb had been named to interim chairman after Maurice "Hank" Greenberg was forced to resign in March 2005 amid a widening accounting scandal. Greenberg had led the company for nearly 40 years.
5) In February, AIG agreed to pay $1.64 billion (euro1.29 billion) to resolve allegations that it used deceptive accounting practices to mislead investors and regulatory agencies. The deal also required AIG to adopt changes in its business practices that will ensure proper accounting procedures in the future.
6) The settlement did not cover Greenberg, who is still being pursued by New York Attorney General Eliot Spitzer and federal regulators on accounting issues.
7) AIG said in a statement that Willumstad's appointment would be effective Nov. 1. He was elected to the AIG board in January. AIG said the unanimous decision to name him chairman came at a board meeting in London.
8) Zarb was to remain an AIG director and serve as a nonvoting member of each standing committee of the board, the statement said.
9) In the statement, Zarb called Willumstad "a superb choice" for the job.
10) Martin Sullivan, who was named chief executive and president of AIG after Greenberg's resignation, said in the statement: "I am delighted with the action the board has taken and look forward to working with Bob Willumstad and the board in continuing to strengthen the AIG franchise around the world."
11) As board chairman, Willumstad will be an ex-officio nonvoting member of each standing committee of the board.
12) AIG said that after Willumstad takes his new post, Morris W. Offit will succeed him as chairman of the finance committee and Michael H. Sutton will succeed Offit as chair of the audit committee.


Report: Former AIG Chairman Hank Greenberg is buying shares in New York Times
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1) Shares in the New York Times Co. rose strongly on Wednesday after a published report indicated that Maurice "Hank" Greenberg, the deposed chairman of American International Group Inc., was buying stock in the newspaper publisher.
2) Shares in the Times rose $1.725, or 7.49 percent, to close at $24.76 Wednesday on the New York Stock Exchange.
3) The New York Post, a tabloid competitor of the Times, reported Wednesday that Greenberg has been acquiring "hundreds of thousands" of shares in the newspaper company. The Post is owned by News Corp.
4) In addition to its flagship newspaper, The New York Times Co. also publishes the International Herald Tribune, The Boston Globe and 15 other daily newspapers. It also owns nine network-affiliated television stations and two New York radio stations as well as several Web operations, including About.com.
5) Earlier reports indicated that Greenberg also was considering a bid for Tribune Co., which has a number of newspaper holdings including the Los Angeles Times and the Chicago Tribune.
6) Mark Corallo, a spokesman for Greenberg, said he had no comment on the latest report.
7) Analysts speculated that Greenberg's interest in the New York Times could increase pressure on company management, which has been the target of shareholder Morgan Stanley Investment Management. Morgan Stanley has asked the Times to eliminate its two classes of stock, which concentrate power in the newspaper's founding family, and make changes to its board.
8) Asked about the New York Post report, Times spokeswoman Catherine J. Mathis said the company had no interest in changing the so-called dual-class share structure, which cements control of the company by the Sulzberger family.
9) "The Ochs-Sulzberger family has given no indication of a desire to change the dual-class structure," she said. This was "designed to protect the editorial independence and integrity of The New York Times newspaper ... and, in these challenging times, that is what it is doing."
10) The report came a day after Citigroup analyst William Bird downgraded The Times to "sell" from "hold."
11) He took the action as part of a report suggesting that newspapers will probably continue to see declining operating profits for about five years, until online platforms overcome print-related losses.
12) A number of prominent figures have expressed interest in investing in the beleaguered newspaper industry.
13) Jack Welch, the longtime head of General Electric Co., and other investors reportedly have sought to buy The Boston Globe from the Times.
14) Los Angeles billionaires Eli Broad and Ronald W. Burkle also have an interest in the Los Angeles Times, which is owned by Tribune.
15) Greenberg stepped down as chairman and chief executive of AIG, one of the world's largest insurance companies, in March 2005 after New York Attorney General Eliot Spitzer launched an investigation into the company's accounting procedures. He alleged AIG used "deception and fraud" to make its financial condition appear stronger than it was to investors.


AIG 4th quarter profit climbs sharply from charge-laden year-ago period, but misses analysts ' estimate
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1) American International Group Inc. said fourth-quarter profit rose sharply a year after the world's largest insurer spent $1.64 billion to settle charges of improper accounting practices.
2) Quarterly profit rose more than eight-fold from last year, but missed Wall Street expectations because of a legal settlement and charges to exit a business. Profit for the quarter ended Dec. 30 rose to $3.44 billion (euro2.6 billion), or $1.31 per share, from last year's $444 million, or 17 cents per share.
3) Adjusting for one-time items, profit totaled $3.85 billion (euro2.91 billion), or $1.47 per share. Results missed Wall Street projections by 2 cents per share, according to analysts surveyed by Thomson Financial.
4) It marks the end of a tough year for Chief Executive Martin Sullivan, who replaced Maurice "Hank" Greenberg amid investigations over its record keeping. Not only has Sullivan attempted to overhaul AIG's business, but help it recover from some $1.73 billion of hurricane and asbestos claims it paid out a year earlier.
5) During the fourth quarter, a legal settlement and the insurer's exit of its domestic financial institutions' credit life business decreased profits by $124 million (euro93.76 million), or 5 cents per share. In addition, a charge related to an increase in its asbestos and environmental reserves cut $129 million (euro97.54 million), or 5 cents per share, from its bottom line.
6) "2006 was a remarkable year beginning with the resolution of our significant regulatory challenges and ending with excellent financial results," Sullivan said in a statement Thursday.
7) For the year, AIG reported a profit of $14.05 billion (euro10.62 billion), or $5.36 per share, compared with $10.48 billion, or $3.99 per share. On an adjusted basis, the company reported a profit of $15.41 billion (euro11.65 billion), or $5.88 per share.
8) Separately, AIG unveiled plans to buy $5 billion (euro3.78 billion) in stock in 2007 under a new $8 billion (euro6.05 billion) share repurchase authorization. The New York-based company also plans to raise its dividend 20 percent annually under "ordinary circumstances."
9) The biggest profit surge during the quarter came from AIG's property and casualty business, which reported a 20 percent reduction in claims compared to last year's pay-outs from hurricanes Katrina and Wilma. The business posted an operating profit of $2.51 billion (euro1.9 billion) from $1.16 billion a year earlier.
10) As part of AIG's attempt to restructure the way it accounts for its derivatives contracts, the insurer's financial services business continued to show a loss.
11) "We made significant progress throughout the year in improving our financial control environment, providing greater transparency in our financial disclosures and remaining on the forefront of good corporate governance," Sullivan said.
12) AIG reported operating income from the business slid to a $126 million (euro95.27 million) decline, compared with operating income of $793 million in the year-ago period. Triggering the fall was a $764 million (euro577.69 million) decline in its derivatives portfolio.
13) For the year, the financial services business reported profit fell 88 percent to $524 million (euro396.22 million), from $4.28 billion a year-earlier. The derivatives portfolio's value dropped $1.82 billion (euro1.38 billion) during the year.
14) State and Federal investigators accused AIG of participating in bid-rigging schemes, paying secret commissions to insurance brokers to steer business to it, using phony insurance deals to boost its earnings and misstating the amount of workers' compensation premiums it had collected.
15) Greenberg also was put under investigation for his role at the company.
16) AIG shares rose 30 cents to close at $67.41 on the New York Stock Exchange, and climbed another 1 percent in after-hours trading. The stock rose almost 7 percent during the fourth quarter, and closed 2006 at $71.66.


AIG chief executive earns compensation valued at nearly $22.5 million in 2006
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1) Martin J. Sullivan, who has been running insurance giant American International Group Inc. since the ouster of longtime chief executive Maurice "Hank" Greenberg, received compensation valued at nearly $22.5 million (euro16.82 million) in 2006, according to a regulatory filing Friday.
2) Sullivan, 52, who is president and chief executive of AIG, collected a salary of $1 million (euro750,000), a bonus of $10.1 million (euro7.55 million) and non-equity incentive plan compensation of $5.8 million (euro4.34 million), according to the proxy filed on Good Friday with the Securities and Exchange Commission.
3) His "other" compensation totaled $703,432 (euro526,009) and included some $257,498 (euro192,550) for personal use of corporate aircraft, $135,014 (euro100,960) for a car and driver and $278,250 (euro208,068) for home security. The home security spending was "a result of implementing the recommendations of independent, third-party security studies," the filing said. It did not elaborate.
4) In addition, Sullivan also was awarded restricted shares under the 2006 performance program with an estimated value of $4.88 when they were granted.
5) The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits and sometimes differ from the totals released by the companies.
6) The proxy was filed in advance of AIG's annual meeting on May 16 in New York City.
7) AIG had a very profitable year in 2006, with net income totaling $14.05 billion (euro10.51 billion), or $5.36 per share, compared with $10.48 billion (euro7.84 billion), or $3.99 per share. Its fourth-quarter profit rose eight fold from the year-earlier period when the insurer spent $1.64 billion (euro1.23 billion) to settle the allegations of improper accounting practices.
8) Sullivan took over as head of the New York-based company in March 2005 after the AIG board removed Greenberg, who had led the company for nearly four decades, amid federal and state probes into accounting irregularities in AIG's property and casualty insurance business. Greenberg later resigned the chairmanship, too.
9) British-born Sullivan had served as AIG's vice chairman and co-chief operating officer before being named chief executive.


American International Group posts 27 percent decline in third-quarter profit
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1) American International Group Inc., the world's largest insurer, said its third-quarter profit dropped 27 percent, hurt by tight credit and the ailing U.S. housing market.
2) Shares fell $1.40, or 2.4 percent, to $56.50 in after-hours trading, when the report was released. They had plunged almost 7 percent to close at $57.90 in regular trading Wednesday.
3) AIG's $872.3 billion (euro592.51 billion) -investment portfolio lost $864 million (euro586.88 million), its credit-swap portfolio lost $352 million (euro239.1 million) and its mortgage-insurance business lost $215 million (euro146.04 million).
4) Those declines dampened the insurer's net income, which fell to $3.09 billion (euro2.1 billion), or $1.19 per share, in the July to September period, from $4.22 billion (euro2.87 billion), or $1.61 per share, in the same period last year.
5) Adjusted to exclude certain items, earnings totaled $3.49 billion (euro2.37 billion), or $1.35 per share, versus $4.02 billion (euro2.73 billion), or $1.53 per share, last year.
6) Revenue edged up to $29.84 billion (euro20.27 billion) from $29.25 billion (euro19.87 billion).
7) The results fell short of estimates. Analysts surveyed by Thomson Financial projected, on average, profit of $1.62 per share on revenue of $29.91 billion (euro20.32 billion). The estimates usually exclude one-time items.
8) Back in August, AIG called exposure to subprime debt "minimal," and said Wednesday that despite some losses due to mortgage-backed bonds, its exposure to the debt remains "high quality," with "substantial protection."
9) "While U.S. residential mortgage and credit market conditions adversely affected our results, our active and strong risk management processes helped contain the exposure," said AIG President and Chief Executive Officer Martin J. Sullivan in a statement.
10) AIG's investment portfolio does include some collateralized debt obligations, instruments that bundle up different types of debt. But the exposure is smaller than that of banks such as Citigroup Inc. and Merrill Lynch & Co., which have written down big losses on their CDO investments. Late Wednesday, Morgan Stanley said it might have to write down $2.5 billion (euro1.7 billion) to $6 billion (euro4.08 billion) in the fourth quarter because of troubles in the credit market.
11) Donald Light, senior analyst with financial research and consulting firm Celent, called AIG's report "disappointing, but not disastrous" in a research note.
12) He said that although AIG saw subprime and credit market-related losses and a 19.1 percent decline in operating income in the life and retirement services unit, there was also solid growth of about 5 percent in the general insurance unit's premiums and only moderate deterioration in underwriting.
13) In its mortgage insurance unit, AIG paid claims of $445 million (euro302.27 million), more than quadruple the $91 million (euro61.81 million) they paid in the third quarter of last year. For every dollar collected in mortgage insurance premiums, they spent $2.14 (euro1.45) administering claims.
14) AIG's lending business, which saw its delinquency rate rise to 2.22 percent from 1.59 percent a year ago, set aside $214 million (euro145.36 million) to cover unpaid mortgage loans.
15) Before releasing its results, AIG was the biggest loser Wednesday among the 30 companies that make up the Dow Jones industrial average, and just last week, it briefly touched a two-year low.
16) Maurice "Hank" Greenberg, AIG's former chief executive, said in a regulatory filing Friday he is considering "strategic alternatives" to boost the value of his AIG stake. Investors speculated he might want to bid for the company or parts of the company, or force AIG to spin off one of its businesses.
17) Greenberg was ousted in 2005, when then-New York State Attorney General Eliot Spitzer accused him of fraudulent accounting. The 82-year-old holds a 14 percent stake in AIG through his firm C.V. Starr, and said in last week's filing he plans to hold discussions with other major shareholders.
18) Going forward, AIG could possibly end up booking charges completely separate from the subprime crisis.
19) Police in Brazil cracking down on tax evasion have detained 19 people allegedly tied to a money-laundering scheme that involves AIG and two Swiss banks. The scheme allegedly helped large Brazilian companies evade taxes by laundering money through AIG, the Swiss banks, and black market money changers.


Trial opens for 5 ex-insurance US executives charged with manipulating financial statements
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1) The former chairman and CEO of the world's largest insurer initiated a deal that led to five ex-executives being charged with participating in a scheme to manipulate the company's financial statements, a federal prosecutor said Monday during opening arguments at their trial.
2) Four former executives of Berkshire Hathaway's General Re Corp. and a former executive of American International Group Inc. are charged in the scheme involving AIG's financial statements.
3) Prosecutor Raymond Patricco said former AIG CEO Maurice "Hank" Greenberg, who has not been charged in the case, started the scheme in 2000, after AIG's stock price dropped 6 percent, representing a loss of $12 billion to shareholders. The price dropped because loss reserves had declined.
4) "Greenberg and AIG came to Gen Re for this deal," Patricco said.
5) Greenberg, who headed the New York-based company for nearly 40 years, has denied any wrongdoing. He was referred to as an unindicted coconspirator in an indictment.
6) Allegations of accounting irregularities, including the Gen Re transactions, led to his resignation in 2005.
7) At issue in the trial of the former executives are two reinsurance transactions between AIG and Stamford-based General Re. Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.
8) Prosecutors said the transactions were initiated by an AIG senior executive to quell criticism by analysts of a reduction in AIG's loss reserves in the third quarter of 2000. The indictment alleges that the aim was to make it appear that AIG increased its loss reserves by about $500 million in 2000 and 2001, pacifying the analysts and investors and artificially boosting the company's stock price.
9) "But the evidence in this case will show that deal was nothing more than a sham transaction," Patricco said. "The defendants in this case knew what appeared in the contracts was a lie."
10) Prosecutors said Greenberg called his friend, former General Re CEO Ronald Ferguson, who is one of the defendants, and told him that AIG wanted to increase its loss reserves by $500 million, but did not want to bear the risk.
11) Ferguson agreed to the deal Greenberg proposed, Patricco said.
12) For a reinsurance transaction to be legitimate, there must be a transfer of risk, which was lacking in the deal in question, prosecutors said.
13) "The evidence in this case will show the defendants knew this would be a no-risk deal for AIG," Patricco said.
14) Greenberg and the company later reported in earnings reports that the loss reserves had gone up.
15) "Plain and simple, ladies and gentlemen, the statements about AIG's loss reserves were lies," Patricco said.
16) In opening arguments, Patricco never mentioned billionaire investor Warren Buffett, who could play a role in the trial. Some of the executives say they believed Buffett was involved and supported the deal that led to the charges. Buffett leads Berkshire Hathaway.
17) But prosecutors say they only named Buffett, who has not been charged with any wrongdoing, as a potential witness to rebut any suggestion by the defense that he was involved in or approved the deal.
18) The former General Re executives charged were Ferguson, chief executive officer from about 1987 through September 2001; Elizabeth Monrad, chief financial officer from June 2000 through July 2003; Robert Graham, a senior vice president and assistant general counsel from about 1986 through October 2005; and Christopher P. Garand, a senior vice president from 1994 until 2005.
19) Also charged was Christian Milton, AIG's vice president of reinsurance from about April 1982 until March 2005. Patricco said Monday that he lost $360,000 when the stock price dropped.
20) The defendants have pleaded not guilty to the charges.
21) AIG filed a restatement in 2005 related to the transactions and agreed to pay a record $1.64 billion in a settlement with federal and New York authorities.
22) In 2005, two senior Gen Re executives, John Houldsworth and Richard Napier, pleaded guilty to conspiracy to falsify SEC filings in connection with the investigation and are awaiting sentencing.
23) If convicted of all the charges, Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million. Garand faces up to 160 years in prison and a fine of up to $29.5 million.
24) The trial is expected to last about two months.


Prosecutors in Gen Re-AIG trial say execs knew financial statements were being manipulated
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1) A federal prosecutor urged a jury Monday to follow the money and convict five former insurance company executives of a scheme to manipulate the financial statements of the world's largest insurer.
2) "The defendants knew the true deal and they documented a false one," prosecutor Eric Glover said in his closing argument.
3) But an attorney for one of the defendants repeatedly invoked the name of widely admired billionaire investor Warren Buffett in arguing there was no wrongdoing and only a routine deal between Berkshire Hathaway Inc.'s General Re Corp. and American International Group Inc. Buffett heads Berkshire Hathaway.
4) "You don't encourage your boss to talk to Warren Buffett about a deal if you're a criminal," said Reid Weingarten, attorney for Elizabeth Monrad, one of the defendants.
5) Prosecutors had said they might seek testimony from Buffett, but they did not. Some of the defendants said they believed he was involved in the deal that lead to the charges, but prosecutors and Buffett say that wasn't the case. Buffett has not been charged with any wrongdoing.
6) Jury deliberations were expected to begin Wednesday after closing arguments are completed.
7) The arguments in U.S. District Court in Hartford capped a monthlong trial for four former executives of General Re and a former AIG executive. The defendants are accused of inflating AIG's reserves through reinsurance deals by $500 million in 2000 and 2001 to artificially boost its stock price.
8) Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.
9) Authorities say the premiums supposedly due AIG were an illusion. In a roundtrip of cash, AIG gave Gen Re the $10 million to pay the premiums as part of a secret side agreement, prosecutors said.
10) Glover said that arrangement was like asking an insurer to pay a driver to insure a car.
11) "Remember, no one pays you to reinsure your car," Glover said.
12) Glover confirmed during his closing argument that former AIG Chief Executive Maurice "Hank" Greenberg was an unindicted coconspirator in the case. Greenberg has not been charged and has denied any wrongdoing, but allegations of accounting irregularities, including the General Re transactions, led to his resignation in 2005.
13) Glover said Greenberg trumpeted the increased loss reserves.
14) "Another quote by Mr. Greenberg, another lie to analysts and shareholders," he said.
15) Prosecutors also played tapes of phone calls and cited e-mails to bolster their case.
16) Glover played one tape in which Monrad, Gen Re's chief financial officer from June 2000 through July 2003, asked if the deal would show up in any public documents.
17) Weingarten, who started off closing arguments for the defendants, said prosecutors played snippets of calls out of context. Monrad was concerned that attention over the deal might make it look like her company was too close to AIG or couldn't handle its own liabilities, Weingarten said.
18) He said his client wanted more accountants and attorneys involved and was not responsible for how AIG booked the deals.
19) Weingarten attacked two government witnesses, saying one was like a virus and that the other was desperate to stay out of jail.
20) Weingarten said it did not make sense that Greenberg, at the end of his career, would be willing to commit a felony because reserves dropped by a fraction of a percent.
21) In addition to Monrad, the defendants are former General Re CEO Ronald Ferguson; former General Re Senior Vice President Christopher P. Garand; and Robert Graham, a General Re senior vice president and assistant general counsel from about 1986 through October 2005.
22) Also charged is Christian Milton, AIG's vice president of reinsurance from about April 1982 until March 2005.
23) If convicted of all the charges, Ferguson, Monrad, Milton and Graham each face up to 230 years in prison and a fine of up to $46 million (euro31.63 million). Garand faces up to 160 years in prison and a fine of up to $29.5 million (euro20.29 million).


Former AIG chief Maurice Greenberg urges insurer to delay annual meeting, says it is in crisis
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1) Maurice R. Greenberg, the former chief executive and largest individual shareholder of AIG, says the insurer is "in crisis" and urged it to postpone its annual meeting in the wake of its massive first-quarter loss, according to regulatory filing Monday.
2) In a letter to American International Group Inc.'s board dated Sunday, Greenberg said he and other top shareholders are deeply concerned "about the persistent and seemingly endless destruction of value at AIG." He said the leadership of the world's largest insurer has also lost credibility with the investment community.
3) "AIG is in crisis," Greenberg wrote.
4) "The company's problems are more than financial and extend far beyond its subprime credit exposure or approach to capital management," he said in the letter. "Core businesses are also deteriorating."
5) AIG spokesman Chris Winans said the board received Greenberg's letter Monday morning but sees no need to postpone the annual meeting, which is scheduled for Wednesday.
6) AIG said Friday it lost $7.81 billion (euro5.06 billion), or $3.09 per share, in the first quarter. The company also announced plans to raise $7.5 billion (euro4.86 billion) in an offering of common stock and equity units and another $5 billion (euro3.24 billion) through high equity fixed-income securities to shore up its capital base.
7) AIG late Monday said it increased the $7.5 billion (euro4.86 billion) offering to $11.9 billion (euro7.71 billion).
8) The company priced about 171 million shares of common stock at $38 per share, for a total of $6.5 billion (euro4.21 billion). It also said it would sell 72 million equity units for $5.4 billion (euro3.5 billion). The equity units consist of subordinated debt securities and contracts that require the holders to purchase AIG stock later.
9) Greenberg said New York-based AIG has not explained why it chose to raise funds in the capital markets rather than pursuing other options, such as divesting noncore assets or seeking other sources of funding.
10) "Shareholders deserve to know how this decision was reached and what other alternatives were considered and evaluated," Greenberg wrote. He also questioned AIG's decision to increase its dividend by 10 percent, to 22 cents per share.
11) AIG shares dropped $1.91, or 4.7 percent, Monday to close at $38.37, their lowest point since October 1998, following a downgrade from Goldman Sachs. Shares slipped another 14 cents in after-hours electronic trading.
12) Greenberg was forced out of the company in 2005, when then-New York State Attorney General Eliot Spitzer accused him of fraudulent accounting.


AIG board of directors names Willumstad to replace Sullivan as chief executive
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1) American International Group Inc., which has lost billions on bad bets on the mortgage market, on Sunday named former Citigroup Inc. executive Robert Willumstad to replace the insurer's besieged chief executive.
2) Willumstad, 62, will take over from Martin Sullivan, 53, effective immediately, the company said. Stephen Bollenbach, the former CEO of Hilton Hotels Corp., will be named AIG's lead director.
3) AIG named Willumstad chairman of the board in fall 2006, about a year after Willumstad left his post as president and chief operating officer at Citigroup. Citigroup had passed him over for the CEO job -- which went instead to the now-dethroned Charles Prince.
4) Sullivan, a native of England who had worked with AIG for 37 years, now joins the long list of CEOs who have been pushed out since the credit crisis started slamming the financial services industry last year. That list includes Citigroup's Charles Prince, Merrill Lynch & Co.'s Stanley O'Neal and Wachovia Corp.'s Ken Thompson.
5) New York-based AIG -- the world's biggest insurer with $1.05 trillion in assets -- lost $7.8 billion during the first quarter of the year due to investments and contracts tied to bad loans. The insurer's first-quarter deficit was even more massive than its fourth-quarter loss of more than $5 billion. After its two straight quarterly losses, AIG revealed plans to raise $20 billion in fresh capital -- but investors reacted skeptically, unsure that extra cash would solve the insurer's problems.
6) Shares of AIG have fallen by more than 50 percent over the past 12 months, closing at $34.18 on Friday.
7) "In the coming months, we will conduct a thorough strategic and operational review of AIG's businesses and their performance," Willumstad said in a statement Sunday. "The Board and I recognize that results over the past two quarters have been unacceptable, but we are confident in AIG's future."
8) George L. Miles, Jr., chairman of the AIG board's nominating and corporate governance committee, said Willumstad's "broad managerial and financial services experience makes him the right person to lead AIG through today's turbulent markets, drive further organizational change and rebuild shareholder value in the years ahead."
9) The company said it will hold a conference call at Monday morning with investors to discuss the management changes.
10) Besides big losses, AIG is reportedly facing a regulatory probe. The Securities and Exchange Commission reportedly began looking into whether AIG had overstated the value of contracts called credit default swaps.
11) Credit default swaps, or CDS, are essentially insurance policies that investors buy to protect against loan defaults, including subprime mortgage defaults. A surprisingly large $9.1 billion loss in AIG's CDS portfolio dealt the insurer its most significant blow during the first quarter.
12) Sullivan -- who received compensation last year of $13.9 million -- replaced Maurice R. "Hank" Greenberg as chief executive in March 2005. Greenberg, forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting, still controls the largest block of stock in AIG.
13) Greenberg has been one of most outspoken of AIG's shareholders, many of whom have blamed poor management for AIG's financial troubles. In a May regulatory filing, Greenberg wrote: "AIG is in crisis."
14) Last August, shortly after mortgage-related losses began roiling the financial services industry, Sullivan told investors that AIG was "well-positioned, even in the event of further deterioration in this market." But by May, Sullivan acknowledged that "the severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations."
15) News of Sullivan's dismissal arrives ahead of this week's quarterly results from three major investment banks: Lehman Brothers Holdings Inc., Goldman Sachs & Co. and Morgan Stanley. Wall Street expects the three reports to offer some insight into how the beleaguered financial sector is faring a year into the credit crisis -- and whether additional management shake-ups may be in store.
16) "Boards of directors are becoming less tolerant, in general," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "The boards of directors of these companies are basically having to step up and be more anticipatory, and take steps show their shareholders and show regulators that they mean business, and that they want to return to profitability."


AIG ' s new CEO Robert Willumstad gets his big break in a tough climate
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1) When Robert Willumstad said goodbye to Citigroup Inc. three years ago, he boldly declared he was leaving to run a major company. Now, at 62, he is making good on that promise -- at floundering American International Group Inc. during the most challenging climate of his four-decade career.
2) Wall Street has yet to be convinced that AIG is headed for profitability anytime soon. Not only did the world's largest insurer get trampled when the credit markets seized up last year, but it also never quite recovered from an industry shake-up a few years ago.
3) But if AIG needs a clean-up, most industry watchers are saying -- tentatively -- that Willumstad is the man for the job. Trained by the master cost-cutter himself, Citigroup's ex-CEO Sanford Weill, Willumstad had a strong record at the world's biggest bank by assets.
4) "I consider myself a hands-on manager," he told investors on a conference call Monday.
5) He has also been on AIG's board since 2006, long enough to know the basics of what went wrong at the company during the last year.
6) Willumstad said he will conduct a review of AIG over the next two to three months. In that time he will meet with shareholders, ratings agencies, regulators, and AIG's noisiest stockholder: ex-CEO Maurice "Hank" Greenberg, whom Willumstad said he telephoned Sunday night and plans to meet with this week, schedules permitting.
7) Willumstad's review could mean some more management reshuffling at AIG. The new CEO said that finding a new chief financial officer to replace Steven Bensinger -- now a vice chairman -- is a priority, and that AIG needs to make sure it has "the right people in the right positions."
8) The review could also result in AIG shedding some of its businesses. Though Willumstad said "it would be very hard for me to imagine seeing the insurance businesses broken up," he also said that "nothing is off the table, and there will be no sacred cows."
9) The most likely candidates for shearing appear to be AIG's credit derivatives business -- which has been the most problematic of AIG's segments lately -- and its airplane leasing business, said Stifel Nicolaus analyst Michael Paisan. AIG's asset management is another non-insurance segment of AIG, but it offers significant synergies with the insurance business, according to Paisan.
10) It is also possible that AIG will pull out of certain regions, Paisan added. AIG operates in about 130 countries worldwide.
11) After an emergency board meeting over the weekend, directors late Sunday named Willumstad to the CEO position to immediately replace Martin Sullivan, who took the helm back in 2005 when then-CEO Greenberg was forced to leave amid accusations of fraudulent accounting.
12) According to an April regulatory filing, as of Dec. 31, 2007, Sullivan was entitled to about $35 million in termination payments and benefits if dismissed "without cause."
13) The management changes arrived after AIG lost billions of dollars in investments linked to mortgages and other risky debt.
14) Analysts on the whole reacted positively on Monday to the choice of Willumstad, but they remain cautious about the company's outlook.
15) Though the management change was not unexpected, the suddenness of the decision worried some investors that the company might be in worse shape than they thought. The insurer, even after its recent $20 billion capital-raising effort, faces huge problems with its exposure to mortgages and other types of debt.
16) Lehman Brothers analyst Jay Gelb said the shake-up was "a step in the right direction," but that he expects "few quick fixes for AIG's problems related to the subprime credit crunch and lack of strong earnings power in its core insurance franchise."
17) Shares of AIG waffled on Monday, slipping 34 cents to $33.84 by late afternoon trading. Analysts are expecting the company to post a second-quarter profit next month, but estimates are all over the map, ranging from a profit of a penny per share to $3.92 per share.
18) AIG has survived other crises throughout its history -- which began in 1919 in Shanghai, where American founder Cornelius Vander Starr started selling insurance to the Chinese.
19) Still, "this appears to be its most vulnerable moment," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
20) Considering how many losing assets they have on their books right now, Battipaglia said, the strength of the team that Willumstad builds around him will be just as important -- if not more so -- than the board's decision to name him CEO.


AIG loses more than $5B on credit market troubles
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1) American International Group Inc. said Wednesday that it lost more than $5 billion in the second quarter, as struggling credit markets stripped several billions of dollars in value from its credit default swaps portfolio and other investments.
2) The world's largest insurer lost $5.36 billion in the April-to-June period, or $2.06 per share. In the same period last year the company earned $4.28 billion, or $1.64 per share.
3) After excluding one-time items, the loss per share came to 51 cents -- much worse than the 63-cent gain that analysts were anticipating.
4) Shares of AIG fell more than 7 percent in after-hours trading, having fallen 80 cents, or 2.7 percent, to close Wednesday at $29.09.
5) AIG's third straight quarterly deficit occurred after it took a loss of $5.56 billion, or $3.62 billion after taxes, in what are called credit default swaps, and a write-down of $6.08 billion, or $4.02 billion after taxes, in the value of other investments.
6) Credit default swaps, which slammed AIG in previous quarters as well, are essentially insurance policies to protect bondholders against defaults. Over the past three quarters, AIG has lost more than $25 billion, pre-tax, to credit default swaps, and more than $15 billion, pre-tax, in other investments.
7) Financial institutions that bet heavily on risky mortgage-backed securities have been pummeled since the start of the credit crisis. When the mortgages underlying these securities began failing, the value of the investments plunged, forcing companies including AIG to heavily mark down the value of their holdings.
8) Investors' abandonment of the credit markets last year brought the value of debt securities down even further, and the continuing wave of foreclosures this year has extended the losses at financial companies.
9) Further dampening its second-quarter results, AIG's general insurance segment saw a 54.3 percent decline in operating income to $1.39 billion, and its life insurance and retirement services division saw a 10 percent decline in operating income to $2.61 billion. The company's asset management unit also suffered a decline in income.
10) Back in May, having posted two consecutive quarterly losses, AIG decided to raise capital in an effort to improve its financial standing. AIG said Wednesday that it raised approximately $20 billion in capital through the sale of $7.47 billion of common stock, $5.88 billion in equity units and $6.91 billion in certain fixed-income securities.
11) Then in June, the insurer replaced its then-CEO Martin Sullivan with Citigroup Inc. veteran Robert Willumstad.
12) Willumstad said at the time that he would review AIG's businesses, and that there were "no sacred cows." The CEO reiterated those thoughts Wednesday, and said the insurer will report on its progress in late September.
13) "Our second quarter results were adversely affected by the severe conditions in the housing and credit markets and a very difficult investment environment," Willumstad said in a statement. "These results do not reflect the earnings power and potential of AIG's businesses and it is clear that we have a lot of work to do to restore AIG's profitability to where it should be."
14) AIG executives will hold a conference call to discuss the company's results with investors on Thursday at 8:30 a.m. Eastern time.
15) The second quarter has been a difficult one for not only AIG, but the entire insurance industry. The sector struggled through tight financial markets, as well as storms that ravaged the Midwest and South.
16) Still, insurers generally have not been hit as badly as investment and commercial banks by the credit crisis.
17) Merrill Lynch & Co. and Citigroup Inc. have each reported write-downs totaling about $46 billion since the credit crisis began a year ago; globally, financial companies have written down some $300 billion in failed credit investments.


AIG shares sink as 2Q results augur further losses
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1) A few years from now, the world's largest insurer might not be so large.
2) Embattled American International Group Inc., in an effort to become profitable again, appears to be leaning toward shrinking -- a similar strategy to that taken by Citigroup Inc., one of the world's biggest banks.
3) "A less complex AIG will be a better competitor," AIG's new chief executive, Robert Willumstad, said during a conference call Thursday with investors.
4) But Willumstad, a Citi veteran, has yet to reveal any definitive plans. And with the mortgage crisis still far from resolution, investors remain wary about stock in a company that has lost money for three straight quarters and that may have to raise more capital. After revealing a nearly $5.4 billion second-quarter loss late Wednesday, AIG saw its shares plummet 16 percent in Thursday's trading.
5) "AIG could not have reported more horrific results," wrote Bijan Moazami, an analyst with Friedman Billings Ramsey, in a note early Thursday. He downgraded AIG's stock to a "hold" rating from "buy."
6) "At this point, we believe that AIG is too big and too complicated for anyone to fully understand and it should be broken up," Moazami said. "We will reassess our views on AIG when a strategic plan is unveiled or when the market environment improves."
7) AIG operates a wide variety of businesses in about 130 countries, ranging from life insurance, auto insurance, property insurance, and mortgage insurance to retirement services, lending, investment services and airline leasing.
8) Wall Street's calls for a break-up of AIG are not as loud as they were for Citigroup, which was having problems boosting profits even before spiking mortgage defaults triggered the credit crisis last summer. Citigroup is not headed for a break-up now, but rather a paring down; its CEO said in May that in the next few years, the company -- which also has suffered three consecutive quarterly losses -- will shed about a fifth of its assets, including a huge chunk of its mortgage lending operations and investments.
9) Willumstad's review is still incomplete, but he said it will result in "significant changes."
10) "Our goal is straightforward: to define AIG's vision and determine the optimal portfolio of businesses based on where our true competitive advantages lie," the CEO said during Thursday's call. He reiterated, though, the company intends to keep International Lease Finance Corp., AIG's airline leasing business, which posted record results in the second quarter.
11) Over the past three quarters, AIG has lost about $25 billion in the value of credit default swaps -- or default protection for bondholders -- and about $15 billion in other investments. Executives say they believe actual, realized losses will end up being much smaller.
12) But the problem is that AIG -- which called its subprime exposure "minimal" a year ago -- is not only joining the likes of Citi and Merrill Lynch & Co. in its mortgage-related assets write-downs. Its other businesses are also weak.
13) "While these charges alone are disconcerting, some of the underlying trends in the company's core lines of business suggest that a return to more normal earnings power may be further off than we had previously thought," wrote Goldman Sachs analyst Thomas Cholnoky in a note to clients late Wednesday. "AIG is clearly facing competitive pressures in many of its business lines that are unlikely to abate in the near term."
14) AIG's general insurance segment saw a 54.3 percent decline in operating income to $1.39 billion. Income also fell in its life insurance and retirement services division and in its asset management unit. The company said it expects its residential mortgage insurance unit, United Guaranty Corp., to continue to see losses into 2009.
15) Keefe Bruyette & Woods analyst Cliff Gallant lowered his per-share earnings estimates for AIG to 40 cents from $1.60 for 2008, and to $5 from $5.45 for 2009. And Credit Suisse analysts lowered their price target on the stock to $30 from $45.
16) Shares of AIG fell $4.66, or 16 percent, to $24.43. They are still about $5 above the multi-year low they reached in July, but remain down about 59 percent since the start of the year.
17) "Investors may have been hoping that new CEO Bob Willumstad would have completed a comprehensive review of AIG's businesses and might be content to weather a one-time charge pursuant to that review," wrote Citigroup analyst Joshua Shanker in a note late Wednesday. But, he added, the notion of a large, conservative "kitchen sink" loss continues to weigh on investors.
18) AIG took a deficit of $5.36 billion, or $2.06 per share, in the second quarter. Before taxes, it lost $5.56 billion in what are called credit default swaps, and wrote down $6.08 billion in the value of its portfolio of mortgage-backed and other investments.
19) So far this year, AIG has raised $20 billion in capital through sales of stock, equity units and fixed-income securities.
20) "It's very hard to predict right now when and if we'll need more capital," Willumstad said. "Our current position we think is satisfactory. Future losses obviously can change that assumption, and we're obviously dependent on the condition of the U.S. housing market and how those will affect the securities that we hold."


AIG allowed to borrow from subsidiaries
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1) American International Group Inc. will be allowed to use $20 billion of assets held by its subsidiaries to provide cash needed for the troubled insurer to stay in business, New York Gov. David Paterson said Monday.
2) The move comes as AIG continues to review its operations and discuss alternatives with outside parties, reportedly including Warren Buffett's Berkshire Hathaway Inc., to improve its business amid concern the world's largest insurer could need up to $40 billion to shore up its balance sheet.
3) Paterson asked New York state insurance regulators to essentially allow AIG to provide a bridge loan to itself. The governor has also asked the head of New York's insurance department to talk with federal regulators about providing an additional bridge loan to AIG.
4) "AIG still remains financially sound," Paterson said.
5) The move will allow AIG to use those assets as collateral to borrow cash to fund its day-to-day operations, Paterson explained.
6) It also helps AIG by "giving them what they need most, which is time," said Keefe Bruyette & Woods analyst Cliff Gallant, who added that the relaxation of insurance regulations is "unprecedented."
7) Typically, a state insurance commissioner's priority is to protect the policyholder, and that includes making it very difficult for an insurer to access the funds that are used to pay claims.
8) AIG could face significant claims from Hurricane Ike and Gustav, which have battled the Gulf Coast, but even as bad as they are, "AIG is a big company, and I would expect they will be able to meet their claims," Gallant said.
9) "Those events do not cause an immediate cash problem for the company," he added.
10) If an insurer cannot pay their claims, the state's insurance fund, which is backed by other insurance companies who do business in the state, would help pay off policyholders.
11) "If anyone's been put at risk, it's the other insurance companies who do business in the state," Gallant said.
12) AIG has been battered over the past year by billions of dollars of losses tied to deterioration in the mortgage and credit markets.
13) Shares of AIG -- once the world's most valuable insurer by market value -- fell $6.63, or 54.6 percent, to $5.51 in afternoon trading. They had been down as much as 71 percent to $3.50 before Paterson's comments.
14) According to news reports, New York-based AIG was seeking $40 billion in emergency funds -- possibly from the Federal Reserve -- to help the insurer avoid a credit rating downgrade, which would make it more expensive for AIG to raise money. AIG has already raised $20 billion in new capital this year.
15) Also, the insurer was said to be in "rescue" talks with Buffett.
16) Berkshire Hathaway spokeswoman Jackie Wilson said Buffett was not available Monday to comment on the AIG-rescue reports. Typically, Berkshire does not comment on any deals before they are completed.
17) On Friday, Standard & Poor's warned that it could cut AIG's credit rating by one to three notches because of concerns that AIG will have difficulty accessing capital in the short term.
18) AIG is in a precarious position, in part, because of a potential downgrade to its credit ratings and how that would affect its portfolio of financial instruments known as credit default swaps. The swaps are essentially insurance coverage to protect investors against defaulting bonds or debt.
19) For the three quarters ended in June, AIG lost about $25 billion in the value of credit default swaps and about $15 billion on other investments, such as mortgage-backed securities, which are bonds backed by a pool of mortgages.
20) As a seller of the swaps, investors go to AIG to insure bonds or debt they hold. As part of those swaps, AIG must maintain certain credit ratings. If AIG's ratings are cut, the insurer must put up more collateral or repay the contracts.
21) "The concern (with AIG) is the contractual effects" if ratings are cut, said Len Blum, managing director at investment bank Westwood Capital.
22) The credit ratings clause is essentially a hedge against failure by AIG to pay out any claims on the swaps.
23) As of July 31, AIG estimated a one-notch downgrade by both S&P and Moody's Investors Service would force it to post $13.3 billion in extra collateral to cover contracts such as credit default swaps, according to a regulatory filing.
24) The potential need for that extra capital puts a constraint on AIG's day-to-day liquidity position, which is why it has been seeking new financing or capital investments.
25) "Liquidity is clearly under pressure now with over $13 billion of additional collateral posting required for (the company) in the event of a ratings downgrade," Credit Suisse analyst Thomas Gallagher wrote in a research note.
26) AIG had worked with New York officials through the weekend to shore up capital after rating agencies threatened downgrades.
27) AIG has said it is exploring all options to help bolster a balance sheet battered by a downturn in the credit and mortgage markets. Those losses over the past year have come amid a sharp increase in defaults among mortgages. As mortgages have increasingly defaulted, investors have worried that bonds backed by the troubled loans would also default, driving their prices down. That has forced companies like AIG to slash their value.
28) "It's not like they have excessive claims," said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte. "What's going on is the same thing that's going on in the banking industry. They are writing down their assets because they've got assets that are not worth what their balance sheet says they're worth."
29) Calls made Monday to AIG were not immediately returned.
30) AIG's chief executive, Robert Willumstad, who has been CEO since June, was expected to announce a turnaround plan Monday, possibly involving the disposal of major assets including its domestic automotive business and its annuities unit, The Wall Street Journal reported, citing unidentified people. Also possibly up for sale is the company's aircraft-leasing business.
31) The need for action was likely exacerbated by the plunge in AIG's stock, which tumbled more than 30 percent on Friday alone and 45 percent last week amid concerns in the financial sector.
32) Willumstad has indicated he was willing to shed some assets, saying about a month ago that a "less complex AIG would be a better competitor."
33) "We're assessing all of our businesses and looking at options for how AIG ought to compete in the future, what kind of businesses we ought to be in," said AIG spokesman Nicholas Ashooh Sunday night.
34) AIG operates a range of insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services.
35) New York-based AIG turned down a capital infusion from a group of private-equity firms because it would have effectively given them control of the company, the Journal reported Monday.
36) The developments come as investment bank Lehman Brothers Holdings Inc. filed for bankruptcy early Monday, and news that Bank of America Corp. was buying Merrill Lynch & Co. in an all-stock deal worth about $50 billion.
37) Also, U.S. and foreign banks were joining forces to create a plan aimed at restoring confidence in the banking system, which has been weakening over the past year after a sharp rise in mortgage defaults set off deterioration in the broader credit markets.
38) "We believe AIG will survive, but we have little indication of how many business lines will ultimately need to be sold and how dilutive to shareholders' future capital raising efforts will be," wrote Citi Investment Research analyst Joshua Shanker in a note to clients.
39) AIG's aircraft-leasing arm, International Lease Finance Corp., posted record results in the second quarter. As recently as June, AIG considered shedding ILFC, a company founded in 1973 that has a fleet of more than 900 airplanes valued at more than $50 billion. But newly appointed Willumstad said after reviewing ILFC's business, "ILFC should be a part of the AIG portfolio." ILFC primarily leases aircraft from Boeing Co. and Europe's Airbus to major airlines and had net income of more than $200 million in the second quarter.


AIG shares fall as it fights for a lifeline
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1) Its future in the balance, American International Group Inc. huddled Tuesday with Federal Reserve officials to find the cash the huge insurer needs to stay in business and avoid igniting more global financial turmoil.
2) Meetings at the New York Fed, which is the Fed's point bank on financial crises, were carrying on into the late afternoon.
3) Timothy Geithner, president of the New York Fed, is involved in the AIG sessions, said a New York Fed official who asked not to be named due to the sensitivity of the discussions. Geithner did not attend the Federal Reserve's interest-rate meeting Tuesday in the central bank's headquarters in Washington.
4) As talks went on, AIG shares rallied off intraday lows, though investors still remained worried there would be no assistance for the company.
5) Fed spokeswoman Michelle Smith said she could not make any comment on reports that the Fed was prepared to offer AIG a loan.
6) Treasury spokeswoman Brookly McLaughlin said that Treasury officials remained focused on market developments but she refused to comment on the AIG reports.
7) Just days ago, though, U.S. Treasury Secretary Henry Paulson said the agency would not help Lehman Brothers Holdings Inc. with the kind of taxpayer-backed funding that JPMorgan Chase & Co. received six months ago to buy ailing Bear Stearns.
8) Lehman, the nation's fourth largest investment banker, filed for bankruptcy on Monday.
9) AIG shares closed down $1.01, or 21.2 percent, at $3.75, rebounding from an earlier low of $1.25. Its shares have traded as high as $70.13 during the past year.
10) The stock got a lift late in the day after CV Starr, an investment firm led by former AIG chief executive Hank Greenberg, disclosed in a regulatory filing it was reviewing its holdings in AIG, leaving open the possibility it could purchase some of the insurer's assets or acquire a bigger stake in AIG.
11) New York-based AIG operates a range of insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those operations are considered healthy and policyholders would likely be covered even if AIG were to file for bankruptcy protection, said Donald Light, a senior analyst with Celent.
12) The problems at AIG stem from the more exotic financial products it offers, including some that insure risky debt and bonds against default. The value of those products have deteriorated amid the downturn in the credit markets over the past year.
13) A failure by AIG would send shock waves through an already battered financial system because of how many banks and other financial firms that have exposure to AIG through complex insurance contracts.
14) "It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."
15) If AIG files for bankruptcy, billions of dollars of insurance contracts known as credit default swaps would likely be wiped out. Much of those losses would be absorbed by the companies holding the contracts, which were sold by AIG.
16) For the three quarters ended in June, AIG itself has lost about $25 billion in the value of its credit default swaps portfolio.
17) Late Monday night, all three major agencies -- Standard & Poor's, Moody's Investors Services and Fitch Ratings -- cut AIG's ratings at least two notches. While the new ratings are all still considered investment grade, the downgrades add to the pressure on AIG as it seeks tens of billions of dollars to strengthen its balance sheet.
18) "Getting some kind of liquidity facility in the next couple of days will help confidence," Rodney Clark, a credit analyst at S&P, said in an interview.
19) AIG spokesmen did not return calls seeking comment on the impact of the downgrades. But last month, the company estimated in a regulatory filing that a one-notch downgrade of its long-term senior debt ratings by both S&P and Moody's would force it to post $13.3 billion in extra collateral.
20) The need for that extra capital would put a constraint on AIG's day-to-day liquidity position, which is why the company has been seeking new financing or capital investments.
21) "While there is a chance the company can work its way through its liquidity problems if it can secure substantial bridge financing, we think this will be challenging to execute it in the current onerous credit environment," Credit Suisse analyst Thomas Gallagher wrote in a research note to clients.
22) In its efforts to improve its liquidity, AIG has already received support from the New York governor and state's insurance regulator. On Monday, Gov. David Paterson said he would support a measure that allows AIG to use $20 billion of assets held by its subsidiaries to provide cash needed to stay in business.
23) Paterson said Tuesday that New York state officials were taking part in the AIG meeting with the Fed.
24) "While we do not generally support government intervention in these situations, in this case we do support the Federal Reserve being part of a private-sector effort to stabilize AIG," New York Attorney General Andrew Cuomo said. "Given AIG's interconnections, its failure would pose serious hardships to many companies and individuals. The Fed's leadership and collaboration is therefore essential, and I hope they act soon."
25) The Fed on Monday asked Goldman Sachs Group Inc. to work with JPMorgan Chase & Co. about a possible short-term loan to keep AIG in business, said a person familiar with the request who could not speak publicly because talks were still ongoing. The loan could be for about $70 billion, the person said.
26) Tuesday morning, while announcing fiscal third-quarter earnings, Goldman Sachs Chief Financial Officer David Viniar said during a conference call that he was "not going to comment on rumors about where we are in helping AIG." He said they are "good important clients" but refused to discuss the matter further.


Stocks stabilize, but critical insurer teeters
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1) Wall Street made a small rebound Tuesday as the Federal Reserve resisted a cut in interest rates one day after a stunning upheaval in the American financial system that sent shock waves through global markets.
2) Investors still kept a nervous eye on American International Group Inc., the world's largest insurer, which huddled with the New York Fed in hopes of staving off a failure that would create even more financial turmoil.
3) The U.S. government is increasingly likely to step in to help rescue AIG, a person with knowledge of the situation said Tuesday.
4) "The glimmer of hope has turned into a ray of hope," said the person, who asked not to be named because of the sensitive nature of the talks to help AIG.
5) The Fed, in its first unanimous decision this year, kept its closely watched federal funds rate unchanged at 2 percent -- but noted that strains on the market have "increased significantly" and said it was ready to act if needed.
6) Stocks slumped immediately after the Fed announcement, with the Dow Jones industrial average dropping about 100 points. But the Dow finished the day up 141, and back over 11,000.
7) It was a breather from the chaos that shook the financial system Monday, when investment house Lehman Brothers declared bankruptcy and the Dow Jones industrials fell more than 500 points -- the biggest drop since the Sept. 11, 2001, terrorist attacks.
8) But AIG, a company that is little known off Wall Street but does business with almost every financial institution in the world, became the new focal point of efforts to stave off what would be the ugliest chapter of the financial meltdown.
9) Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with members of Congress to brief them on options the government is considering for AIG. The meeting ended without Bernanke and Paulson commenting.
10) AIG executives huddled with Fed officials and representatives from top banks at the New York Fed in downtown Manhattan to find the cash the huge insurer needs to stay in business.
11) One solution: A plan to have the government provide financial backing to ensure that AIG could secure a short-term loan from banks worth up to $100 billion to stay out of bankruptcy court, the person, who had direct knowledge of the talks, said.
12) He said the discussions had stalled because AIG did not have enough collateral to obtain a loan of that size. Both sides were trying to figure out how to close the gap between the amount AIG needs and the amount of collateral it has.
13) The person said it was increasingly likely the Fed would step in with taxpayer money.
14) AIG, which insures $88 billion worth of assets, plays an outsized role insuring mortgages and corporate loans, but what has Wall Street scared is that it is an integral player in the murky world of hedge funds and credit derivatives.
15) Investors worry its failure would pose an even greater threat to the U.S. financial system than the collapse of Lehman. AIG stock was down as much as 60 percent Tuesday.
16) Late Monday night, all three major credit rating agencies cut AIG's ratings at least two notches. While the new ratings are all still considered investment grade, they add pressure on AIG as it seeks tens of billions of dollars to strengthen its balance sheet.
17) New York Gov. David Paterson said Monday he would support a measure allowing it to use $20 billion of assets held by its subsidiaries to pay for its business -- essentially giving it a bridge loan from itself.
18) A collapse of AIG would force Wall Street to untangle the complex credit derivatives markets and send the market scrambling to figure out who owes what to whom -- or even who owns what.
19) "Regulators knew that if Lehman went down, the world wouldn't end," money manager Michael Lewitt wrote in an op-ed column Tuesday in The New York Times. "But Wall Street isn't remotely prepared for the inestimable damage the financial system would suffer if AIG collapsed."
20) As AIG teetered, central bankers around the globe scrambled to revive credit markets. The Fed injected $70 billion into the American financial system. The European Central Bank pumped one-day financing of nearly $100 billion into the 15-nation zone. The Bank of Japan added $24 billion, and England's central bank almost $36 billion.
21) Cash left world markets Monday like an outgoing tide. The interest rate banks charge each other for overnight loans soared as high as 6 percent -- far above the Fed's target rate of 2 percent and a sign banks did not trust each other enough to make even 12-hour loans.
22) Meanwhile, British bank Barclays PLC planned to announce by early Wednesday its intention to acquire all or part of Lehman Brothers Holdings Inc.'s investment banking and trading operations, a person close to the talks said. The person spoke on the condition of anonymity because a final agreement had yet to be reached. Lehman Brothers filed the largest bankruptcy in American history on Monday.
23) Separately, Bank of America Corp., which in July bought battered Countrywide Financial Corp., began to work out how it would digest its $40 billion acquisition of Merrill Lynch after its shotgun wedding with the brokerage on Sunday.
24) In the wings, Goldman Sachs Group Inc., which began the year as one of five large investment banks and is now one of two, reported its worst profit drop since going public in 1999. Goldman's third-quarter profit dropped 71 percent to $810 million, while revenues plummeted 50 percent.
25) The only other investment bank left standing, Morgan Stanley, had better news. It reported solid quarterly profits -- though down 7 percent from a year earlier -- and surpassed Wall Street's expectations.
26) Earlier this year, the federal government engineered the sale of Bear Stearns to JPMorgan Chase, and earlier this month the government assumed control of mortgage giants Fannie Mae and Freddie Mac.
27) On the campaign trail, Republican presidential nominee John McCain called for a commission to study the economic crisis. Democrat Barack Obama laughed the idea off as "the oldest Washington stunt in the book."
28) "This isn't 9/11," Obama told a noisy crowd of more than 2,000 at the Colorado School of Mines, dismissing the idea of a need for study. "We know how we got into this mess. What we need now is leadership that gets us out. I'll provide it. John McCain won't."
29) McCain, campaigning in Florida, promised reforms, too, to expose and end the "reckless conduct, corruption and unbridled greed" on Wall Street that he said had caused the financial crisis.
30) To say that it is an unusual week in U.S. finance would be a huge understatement. On Tuesday, the Web site Christianity Today even posted an e-mail from an evangelical leader asking Christians to pray for Wall Street.
31) "We may find it hard to pray for these bankers because they are insanely wealthy, true," it read. "A few of them can be terribly arrogant; and some can have little heart for the less wealthy. Yet, Jesus prayed for the rotten because he loved the rotten. In this situation prayer could accompany a revival of the heart on Wall Street."


US government steps in again, bails out AIG
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1) In the most far-reaching intervention in the private sector ever for the Federal Reserve, the U.S. government bailed out insurance giant American International Group Inc. in a move aimed at averting a collapse that would be felt the world over.
2) The deal announced Tuesday was the second time this month the U.S.'s central bank put taxpayer money on the hook to rescue a private financial company, saying its failure would further disrupt markets and threaten the already fragile economy. It came a day after the government declined to step in and save Lehman Brothers, a storied Wall Street investment bank brought to its knees by the credit crisis that has roiled the market for over a year.
3) Under the deal, the government will get a 79.9 percent stake in AIG, the world's largest insurer, and the right to remove senior management.
4) AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to a person with direct knowledge of the matter. The person asked not to be identified by name because it had not officially been announced. Willumstad had been at the helm of AIG since June.
5) Two calls to AIG to confirm the executive change were not immediately returned.
6) AIG said it will repay the money in full with proceeds from the sales of some of its assets. It will be up to the company to decide which assets to sell and the timing. The government does, however, have veto power.
7) Under the deal, the Federal Reserve will provide a two-year $85 billion emergency loan at an interest rate of about 11.5 percent to AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.
8) AIG shares sank $1.54, or 41 percent, to $2.21 in afternoon trading Wednesday. They traded as high as $70.13 in the past year.
9) The government's move was similar to its bailout of Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.
10) The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.
11) It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.
12) The decision to help AIG marked a reversal for the government from the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.
13) The White House said it backed the Fed's decision Tuesday.
14) "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy, " White House spokesman Tony Fratto said.
15) After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.
16) "The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse," said Sen. Charles Schumer.
17) In a statement late Tuesday, AIG's board of directors said the loan will protect all AIG policy holders, address concerns of rating agencies and buy the company time to sell off assets.
18) "We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets," the statement said. "In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."
19) New York officials said the deal helps stave off a fiscal crisis for the state. AIG is based in New York.
20) "Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night.
21) In an interview on ABC's "Good Morning America" program Wednesday, former longtime AIG CEO Maurice "Hank" Greenberg was asked whether critics are being fair who say the situation at AIG and the financial markets generally happened because of greed, bad business practices and corruption.
22) "No, I think it's an unfair appraisal," said Greenberg, who was replaced as CEO three years ago as part of an accounting probe. "You know, there are many things that contributed to this unfortunate episode. after I left the company, all the risk management procedures that we had in place were obviously dismantled. I can't explain that. There's a new board of directors. One should be asking that board of directors what they did and why."
23) Greenberg said he has lost "my entire net worth. Literally, my entire net worth.'
24) "Worked 40 years building the greatest insurance company in history, one that everyone in the world envied who was in this industry. I'll get by, but my heart goes out for the thousands and thousands of employees and their families who shareholders and not only in the united states but worldwide. That is a tragedy," he said.
25) The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.
26) On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.
27) The central bank also pumped $70 billion into the U.S. financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.
28) The stock market, which Monday posted its largest point loss session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.
29) AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent -- and another 45 percent after hours.
30) The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.
31) The worries were heightened Monday after Moody's Investor Service, Standard and Poor's and Fitch Ratings lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance -- such as banks and other financial companies -- would have found themselves without protection against losses on the debt they hold.
32) On Wednesday, Fitch Ratings revised its outlook on AIG to "evolving" from "negative," saying it views the deal "as a favorable development that alleviates significant near-term liquidity concerns."
33) Fitch said that the agreement with the Fed provides "a platform of stability for AIG's primary operating subsidiaries and significantly curtails substantive pressure on AIG to sell assets quickly to fund potential cash calls."
34) Such action will enable AIG to take a more comprehensive and deliberate approach to restructuring the company that better serves the interests of policyholders and creditors, the rating agency said.
35) The agency currently rates AIG's senior debt 'A', the sixth-highest investment grade.


Will AIG plan cost taxpayers money, or just sleep?
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1) American taxpayers awoke Wednesday to learn they may end up owning one of the world's largest insurers. They might now lose some sleep wondering whether the government's $85 billion loan to American International Group Inc. was a wise investment.
2) If the gamble succeeds, the company nurses itself back to health, unhinged financial markets calm down and taxpayers turn a profit.
3) If it fails, the American public feels the hit -- and possibly finds itself rescuing other major financial institutions, swelling the deficit and potentially driving up interest rates on mortgages, student loans and other debt.
4) Analysts said Wednesday the odds are pretty high that the rescue will be a good investment for taxpayers, with AIG paying off the loan at a relatively high interest rate and the government potentially making money off its nearly 80 percent equity stake in the company.
5) In 1979, the U.S. guaranteed $1.2 billion worth of loans to the struggling automaker Chrysler. When the company rebounded four years later, the government reaped more than $300 million in profits.
6) While relatively unknown outside of financial circles before Wednesday, AIG is a colossus on Wall Street and financial districts around the globe, with operations in more than 130 countries and $1 trillion in assets on its balance sheet.
7) Besides life, property and other insurance offerings, AIG provides asset-management services and airplane leases. Its myriad businesses are also linked to mutual funds, annuities and other retirement products held by millions of ordinary Americans.
8) But perhaps the biggest concern about AIG is the dizzying array of complex financial instruments it structured for commercial banks, investment banks and hedge funds around the globe -- many of which were directly or indirectly linked to the value of U.S. mortgages.
9) "AIG is in this mess because they got leveraged up to their eye balls," said Professor John Coffee of Columbia University Law School.
10) AIG is required to post capital as collateral to back the securities and derivatives it issues, and those requirements increase if its credit rating is downgraded, as happened on Monday night.
11) AIG "essentially became the insurer of the financial industry," said Barry Ritholtz, chief executive of FusionIQ, a research firm. "As we've seen, that turned out to be not such a great trade."
12) The company's staggering reach, combined with the speed with which it faltered, is what forced the government to intervene after private rescue attempts fell apart and pushed the company to the edge of bankruptcy.
13) "A failure was seen as having catastrophic implications. It met the threshold of too big and too intertwined to fail," said former Federal Reserve economist Brian Sack now at Macroeconomic Advisers.
14) Over the weekend, the government refused to pony up taxpayer money to rescue troubled investment bank Lehman Brothers. That was seen as drawing a line in the sand after the Fed financially backed JPMorgan's takeover of Bear Stearns and then the Bush administration seized control of mortgage finance companies Fannie Mae and Freddie Mac.
15) But that turned out to be wrong.
16) The government agreed to loan up to $85 billion to AIG over two years in exchange for the right to buy 79.9 percent of the company. The hope is that the money will give the company enough time to reorganize and sell assets to repay the loan.
17) The interest rate the government is charging AIG for the loan is high -- 11.5 percent. Because the government can borrow money right now at around 3.4 percent, taxpayers stand to make a handsome profit if all goes well.
18) The government is first in line to be paid back on the loan, which is backed by the assets of the entire company.
19) Key to the U.S. being repaid for its loan is whether AIG can sell its assets, how quickly and for what price.
20) For the company, that might mean putting some of its profitable, noncore assets, such as its aircraft leasing business, on the block. AIG's breakup value could top $150 billion, according to a preliminary estimate from FBR Capital Markets.
21) "The odds are pretty high that it will end up being a good investment for taxpayers," said Mark Klock, finance professor at George Washington University. "I think that AIG will be able to dispose of assets in an orderly fashion in the next year or so and the government will actually get back the money lent out -- and more -- in interest," he said.
22) It will be up to AIG to decide which assets to sell and the timing, which some analysts said should be done quickly because the publicized difficulties at the company could begin to turn customers away. The government does, however, have veto power.
23) One unit that analysts said will likely be sold is the International Lease Finance Corp., which leases out more than 900 aircraft with asset values topping $44 billion at the end of the second quarter. This division has been a moneymaker for AIG, tallying $873 million in operating income in 2007 and $555 million in the first half of this year, according to securities filings.
24) Another possibility for sale is AIG's foreign life insurance business, with profits of $1.5 billion in the first half of this year on top of earnings of $6.19 billion in 2007. Gary Ransom, an analyst with Fox-Pitt Kelton, pegged the value of that business at as much as $50 billion.
25) But Ransom also noted the foreign life insurance business is also probably the hardest to sell because it includes many different divisions operating across many countries.
26) "I would say everything is on the table," Ransom said. "At this point, the goal isn't to keep AIG as the owner of businesses."
27) If AIG is keeping some operations, the commercial lines and property and casualty operations are possibilities because they are among the divisions that are most closely associated with the company.
28) "They would love to sell off the bad stuff, but the only option they have is to sell off the good stuff," said Kent Smetters, an associate professor insurance and risk management at the Wharton School of Business.


Former AIG CEO Greenberg says plans to sell stock
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1) Former American International Group Inc. chief executive Maurice "Hank" Greenberg intends to sell his AIG stock, according to a regulatory filing on Thursday.
2) Greenberg, who ran AIG for nearly four decades, said he plans to sell shares of the New York-based insurer for "liquidity and other purposes," according to a filing with the Securities and Exchange Commission.
3) Late Tuesday, AIG said it signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion emergency loan at an interest rate of about 11.5 percent. AIG had teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued.
4) Greenberg will sell the stock in the open market, and the sales may "materially" decrease the holdings that he controls, according to the filing.
5) Greenberg, through a personal stake, family trust and companies that he controls, owns more than 10 percent of AIG, making him its largest shareholder before the company agreed to a federal bailout that will give the government 80 percent ownership.
6) His personal stake, according to Thomson Reuters, is about 36.9 million shares.
7) AIG shares tumbled 29 cents, or 8.8 percent, to $3.02 in trading Thursday, valuing Greenberg's personal stake at roughly $111.4 million.
8) AIG traded as high as $70.13 last October, as the credit crisis was unfolding. Assuming he held approximately the same size stake at that time, his holdings would have lost about $2.4 billion in value over that period.
9) Also Thursday, prosecutors attempted to convince a federal judge to consider investor losses as great as $1.4 billion when sentencing five insurance executives convicted of a scheme to manipulate AIG's financial statements. Four former executives of General Re Corp. and a former executive of AIG were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.


AIG plans sale of business units to repay debt
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1) The insurer American International Group Inc. said Friday it plans to sell off a number of business units to pay off its massive government loan.
2) The announcement was expected by Wall Street. But it now leaves investors wondering how much AIG will be able to raise from the sales.
3) On the brink of failure last month, AIG was bailed out when the government offered it an $85 billion loan during the ongoing credit crisis that saw Lehman Brothers Holdings Inc. file for bankruptcy protection and the sale of Merrill Lynch & Co. to Bank of America Corp. In return for the loan, the government received warrants to purchase up to 79.9 percent of AIG.
4) Shortly after the deal, newly appointed Chairman and Chief Executive Edward Liddy said he planned to quickly raise funds through asset sales, but hoped to hold on to as many of AIG's insurance operations as possible.
5) AIG, one of the world's biggest insurers, Friday didn't specifically disclose all the assets it would sell or the expected prices from the sales. However, the New York-based insurer said it plans to retain its U.S. property and casualty and foreign general insurance businesses, and also plans to retain an ownership interest in its foreign life insurance operations.
6) Later Friday, Moody's Investors Service downgraded AIG's senior unsecured debt rating to "A3" from "A2," noting that the newly revamped company would have a less diverse base of businesses.
7) Liddy, former CEO of Allstate Corp., said AIG has been contacted by "numerous" parties regarding possible sales of businesses, and AIG will try to sell its operations to "brand-name" buyers who have strong ratings and balance sheets.
8) Even though the company didn't disclose many specifics, Liddy did say he was hopeful that the two-year, $85 billion government loan would be enough to provide AIG "the flexibility we need to work our way out of this situation."
9) "Our goal is to emerge from this process in a timely fashion as a smaller, but more nimble company that is solidly profitable and has attractive, long-term growth prospects," Liddy said in his first call with investors and analysts. "I think what the Federal Reserve has provided us has been very generous and we are going to do everything we cannot to have to go back to them."
10) Problems at AIG did not come from its traditional insurance subsidiaries, but instead from its financial services operations, and primarily its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.
11) AIG's traditional insurance subsidiaries have widely been viewed as safe.
12) As of Sept. 30, AIG had drawn $61 billion on the credit facility, of which about $54 billion has gone toward its securities lending and AIG's financial products area. The rest of the money has been for other liquidity needs amid an "unprecedented" freezing of credit markets, Liddy said.
13) While the sale of some of AIG's businesses will be used to pay off the outstanding government loan, additional funds will be used to help address the company's capital structure, Liddy said.
14) Some analysts, however, questioned how much AIG will get from any sales.
15) "We are giving AIG credit that it can use its Fed-supported liquidity to pursue a measured and deliberate asset sale program," said CreditSights analyst Rob Haines in an interview. "That said, it's not like they can wait to get the best price, six or seven months for now. They don't have unlimited time."
16) Liddy, who replaced Robert Willumstad, added he didn't expect a fire sale, and buyers would have to assume the debt of AIG businesses they acquired.
17) So far, AIG has announced only one deal, a sale of its 50 percent interest in London City Airport to its partner in the venture, Global Infrastructure Partners. It bought the stake as a joint venture with the private-equity fund in 2006 for a total price estimated around $1.4 billion. The companies didn't disclose the terms of the deal.
18) "It's a tough environment right now, but it's kind of a once in a generation opportunity to pick up very desirable business units," Haines said.
19) The company said it would focus on its property, casualty and foreign general insurance units, and was working on alternatives for its financial products business and its securities lending program.
20) Those plans include some businesses outside the U.S., primarily parts of American Life Insurance Co., which operates as a life insurer in more than 55 nations and regions.
21) Liddy added he wouldn't be surprised to see sovereign wealth funds providing resources to acquire some AIG businesses.
22) One unit that analysts have said could be sold is International Lease Finance Corp., which leases out more than 900 aircraft with asset values topping $44 billion at the end of the second quarter. Another unit that could possibly be sold is consumer-focused lender American General Finance Corp.
23) Other businesses AIG operates include life, commercial auto and accident and health insurers.
24) Last week, during an interview with CNBC, billionaire investor Warren Buffett said his firm, Berkshire Hathaway Inc., would be interested in acquiring a couple of AIG's assets depending on what the company was willing to sell.
25) Berkshire Hathaway spokeswoman Jackie Wilson said Friday that no one was immediately available to discuss the AIG asset sale. Buffett is out of town, she said.
26) The Blackstone Group and JPMorgan Chase & Co. are working with AIG on the sale of its assets.
27) AIG shares fell 14 cents, or 3.5 percent, to $3.86.


Insurance giant AIG ' s role in market crisis probed
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1) The government's rescue of American International Group Inc. last month is getting a critical eye from lawmakers examining the chain of events that forced a $700 billion bailout of the financial industry.
2) Three former AIG chief executive officers were scheduled to testify Tuesday before the House Oversight and Government Reform Committee, but one of them -- Maurice "Hank" Greenberg, the company's largest individual shareholder -- canceled his appearance.
3) Committee spokesman Karen Lightfoot said she did not know the reason for the cancellation, but CNBC reported that Greenberg had bowed out because of illness.
4) The hearing is the second in two days into financial excesses and regulatory mistakes that have spooked stock and credit markets and heightened fears about a global recession.
5) The Federal Reserve rescued AIG with the $85 billion loan Sept. 16, one day after investment bank Lehman Brothers declared bankruptcy when the government wouldn't come to its aid. Lehman Brothers' chief executive officer testified Monday before the congressional oversight panel but didn't shed much light on how the mid-September events cascaded into a collapse of credit markets requiring a broad bailout.
6) The government now holds warrants that can be converted into an 80 percent stake of AIG and there is hope taxpayers won't lose money on the deal since the company has profitable subsidiaries that could be sold to pay off the Fed's loan.
7) The Fed's move rescued the company from bankruptcy after the insurance conglomerate's exposure to enormous losses related to subprime mortgage securities forced it to the brink.
8) Problems at AIG did not come from its traditional insurance subsidiaries, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. Government officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.
9) Despite the government's move on AIG and Congress agreeing to spend up to $700 billion to buy up soured mortgage-based securities and other bad debt, credit remains tight and the stock market continued to plunge downward Monday despite a brief rally at the end of the day.
10) For four decades Greenberg oversaw AIG's growth into a sprawling conglomerate with businesses in 130 countries. Also on deck is Robert B. Willumstad, the former CEO just ousted by Treasury Secretary Henry Paulson.
11) On Monday, Paulson named Neel Kashkari, 35, to head the office created under the emergency bailout enacted Friday. Kashkari, an assistant Treasury secretary for international affairs, helped draft the bailout legislation and is one of Paulson's closest advisers on the crisis.


Execs ' posh retreat after bailout angers lawmakers
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1) Less than a week after the federal government had to bail out American International Group Inc., the insurance company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.
2) The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.
3) The retreat didn't include anyone from the financial products division that nearly drove AIG under, but lawmakers were still enraged over thousands of dollars spent on catered banquets, golf outings and visits to the resort's spa and salon for executives of AIG's main U.S. life insurance subsidiary.
4) "Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," Democratic House Oversight Committee Chairman Henry Waxman scolded the company during a lengthy opening statement. "Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
5) The hearing also revealed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released Tuesday by a congressional panel examining the chain of events that forced the government to bail out the conglomerate.
6) The panel sharply criticized AIG's former top executives, who cast blame on each other for the company's financial woes.
7) "You have cost my constituents and the taxpayers of this country $85 billion and run into the ground one of the most respected insurance companies in the history of our country," said Democratic Rep. Carolyn Maloney. "You were just gambling billions, possibly trillions of dollars."
8) AIG, crippled by huge losses linked to mortgage defaults, was forced last month to accept the $85 billion government loan that gives the U.S. the right to an 80 percent stake in the company.
9) Waxman unveiled documents showing AIG executives hid the full extent of the firm's risky financial products from auditors, both outside and inside the firm, as losses mounted.
10) For instance, federal regulators at the Office of Thrift Supervision warned in March that "corporate oversight of AIG Financial Products ... lack critical elements of independence." At the same time, Pricewaterhouse Cooper confidentially warned the company that the "root cause" of its mounting problems was denying internal overseers in charge of limiting AIG's exposure access to what was going on in its highly leveraged financial products branch.
11) Waxman also released testimony from former AIG auditor Joseph St. Denis, who resigned after being blocked from giving his input on how the firm estimated its liabilities.
12) Three former AIG executives were summoned to appear before the hearing. One of them, Maurice "Hank" Greenberg -- who ran AIG for 38 years until 2005 -- canceled his appearance citing illness but submitted prepared testimony. In it, he blamed the company's financial woes on his successors, former CEOs Martin Sullivan and Robert Willumstad.
13) "When I left AIG, the company operated in 130 countries and employed approximately 92,000 people," Greenberg said. "Today, the company we built up over almost four decades has been virtually destroyed."
14) Sullivan and Willumstad, in turn, cast much of the blame on accounting rules that forced AIG to take tens of billions of dollars in losses stemming from exposure to toxic mortgage-related securities.
15) Lawmakers also upbraided Sullivan, who ran the firm from 2005 until June of this year, for urging AIG's board of directors to waive pay guidelines to win a $5 million bonus for 2007 -- even as the company lost $5 billion in the 4th quarter of that year. Sullivan countered that he was mainly concerned with helping other senior executives.
16) Sullivan also came under fire for reassuring shareholders about the health of the company last December, just days after its auditor, Pricewaterhouse Cooper, warned of him that AIG was displaying "material weakness" in its huge exposure to potential losses from insuring mortgage-related securities.
17) AIG's problems did not come from its traditional insurance subsidiaries, which remain healthy, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. Government officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.
18) AIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as "credit default swaps." AIG was a major seller of the swaps, which are a form of insurance, though they are not regulated that way.
19) The swap contracts promise payment to investors in mortgage bonds in the event of a default. AIG has been forced to raise billions of dollars in collateral to back up those guarantees.
20) Sullivan said many of the firm's problems stemmed from "mark to market" accounting rules mandating that its positions guaranteeing troubled mortgage securities be carried as tens of billions of dollars in losses on its balance sheet.
21) This in turn, said former AIG chief executive Willumstad, who ran the company for just three months after Sullivan left, forced the firm to raise billions of dollars in capital. The federal rescue came after AIG suffered disastrous liquidity problems after its credit rating was lowered, forcing the company to come up with even more capital.
22) "AIG was caught in a vicious cycle," Willumstad said in the testimony.
23) Greenberg said that AIG "wrote as many credit default swaps ... in the nine months following my departure as it had written in the entire previous seven years combined. Moreover, "unlike what had been true during my tenure, the majority of the credit default swaps that AIGFP wrote in the nine months after I retired were reportedly exposed to subprime mortgages."
24) But Sullivan said the complex swaps had underlying value, even as the market for them froze, sending their book value plummeting and forcing AIG to scramble for collateral.
25) "When the credit markets seized up, like many other financial institutions, we were forced to mark our swap positions at fire-sale prices as if we owned the underlying bonds, even though we believed that our swap positions had value if held to maturity," Sullivan said.
26) The hearing is the second in two days into financial excesses and regulatory mistakes that have spooked stock and credit markets and heightened fears about a global recession.


New AIG loan renews concerns over insurer ' s health
(APW_ENG_20081009.1525)
1) Concerns about the health of American International Group Inc. were renewed Thursday, a day after the insurance giant said it would receive an additional $37.8 billion loan from the Federal Reserve.
2) "The bottom line is, they need more liquidity than they thought," said Mark Lane, an analyst for William Blair & Co. The new loan is on top of a two-year, $85 billion loan AIG received last month from the Fed in an effort to stay in business.
3) In the past week, AIG has drawn an additional $9 billion on the initial loan, bringing the total amount drawn to $70.3 billion as of Wednesday, according to new Fed data released late Thursday.
4) AIG shares fell 80 cents, or 25.1 percent, to $2.39 in trading Thursday.
5) AIG is apparently facing a liquidity crunch greater than was anticipated a month ago when the U.S. government first bailed out the company.
6) Problems with the securities lending program, which is a common program among financial institutions, is the reason for the additional $37.8 billion loan.
7) The new loan will help AIG cover requests from clients to redeem borrowed securities. In the past, these securities were previously loaned by AIG's insurance company subsidiaries to third parties in return for cash. The cash would then be reinvested in an attempt to increase returns.
8) Now, Lane said, clients who borrowed securities want to return them to AIG and get their cash back.
9) Amid the continuing credit crisis, financial firms have been hoarding cash for fear of future losses on investments. The situation has also spooked banks into nearly shutting off lending amongst each other.
10) The problem is, AIG "didn't have the money to give it back," Lane said. "That means that somebody else has to step in to take that other borrower out of the transaction."
11) That is where the new Fed loan comes into play. The New York Federal Reserve Bank will loan AIG the $37.8 billion and in return receive the securities that AIG now holds again, Lane said.
12) The securities are investment-grade, fixed-income securities.
13) The arrangement will help AIG secure funds on an as-needed basis, the New York-based insurer said Wednesday in a statement.
14) The insurance subsidiaries themselves continue to be safe, said David Neustadt, a spokesman for the New York State Insurance Department.
15) "If anything subsidiaries are safer with this loan," Neustadt told the Associated Press.
16) AIG's traditional insurance subsidiaries have widely been considered safe amid the recent turmoil. It was not those units that have the company on the edge of failing.
17) Instead, it is the financial services operations, and primarily its insurance of mortgage-backed securities and other risky debt against defaults. If AIG could not make good on its promise to pay back soured debt, investors feared the consequences would pose a threat to the U.S. financial system.
18) The ensuing liquidity problems are what put AIG on the brink of bankruptcy last month, when the government offered it the $85 billion loan. In return for the loan, the government received warrants to purchase up to 79.9 percent of AIG.
19) Another liquidity squeeze in recent days to redeem securities could have put the insurer in a similar position that it faced just weeks ago.
20) AIG said last week it would sell off a number of business units to pay off the $85 billion government loan. The company didn't specifically disclose all the assets it would sell or the expected prices from the sales. However, AIG did say it plans to retain its U.S. property and casualty and foreign general insurance businesses, and plans to retain an ownership interest in its foreign life insurance operations.
21) The additional loan this week could require AIG to sell more assets.
22) "By them having greater liquidity needs, it would suggest that maybe they would have to cut deeper," Lane said. "But it's unclear because we don't have more details."
23) David Steuber, co-chair of law firm Howrey LLP's Insurance Recovery Practice Group in Los Angeles, said that to a certain extent AIG is going to have to be realistic in terms of what they are going to sell and what they are going to be able to sell it for.
24) "I suspect that buyers would take a wait-and-see approach," Steuber said. "As more time passes and if AIG doesn't sell some of its good assets and get some real money in, that's to AIG's disadvantage."
25) The deal for the additional Fed loan comes as AIG has been castigated by lawmakers and the White House for spending hundreds of thousands of dollars on a posh California retreat just days after getting the $85 billion federal bailout.
26) Lawmakers investigating AIG's meltdown said they were enraged that executives of AIG's main U.S. life insurance subsidiary spent $440,000 on the retreat, complete with spa treatments, banquets and golf outings. White House press secretary Dana Perino on Wednesday called the event "despicable."
27) AIG issued a statement Wednesday saying that the "business event" was planned months before the Sept. 16 bailout and that it was held for top-producing independent life insurance agents, not AIG employees. Of the 100 attendees, only 10 worked for the AIG unit hosting the event, it said.
28) The insurer said Liddy sent a letter to Treasury Secretary Henry Paulson "clarifying the circumstances" of the event. In the letter, Liddy assured Paulson that AIG is "reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating."
29) On Thursday, the insurer said it canceled a future California retreat that was to be held later this month.


Former AIG CEO says loan could sink the insurer
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1) Former American International Group Inc. chief executive, Maurice Greenberg, says the federal government's $85 billion loan to the huge insurance company will drive it out of business unless its terms are changed.
2) "The role of government should not be to force a company out of business, but rather to help it to stay in business, especially a company that has been the pride of its industry," Greenberg wrote in a letter sent late Tuesday to the insurer's current CEO, Edward Liddy.
3) In the letter, Greenberg said AIG will not be able to pay off the loan from proceeds tied to asset sales and potential earnings. That will eventually lead to the liquidation of AIG, he said in the letter.
4) Last month amid the ongoing credit crisis, AIG received a two-year, $85 billion loan from the government in an effort to avoid a liquidity crisis that could have put the insurer out of business. In return for the loan, the government received warrants to acquire a 79.9 percent ownership stake in AIG.
5) AIG then received a second loan from the government for $37.8 billion. The second loan though is collateralized by investment-grade, fixed-income securities owned by AIG.
6) AIG said it will sell various assets to repay the loans.
7) Greenberg said changing the terms of the initial loan with the government should make it feasible for AIG to remain in business and pay the government back.
8) He suggested that instead of the government receiving an ownership stake, it receive preferred stock with an annual dividend ranging between 5 percent and 6 percent and a 10-year term for AIG to redeem the loan at a 10 percent premium.
9) Greenberg ran AIG for 38 years until 2005. Before the initial government loan, Greenberg was AIG's largest shareholder. After the deal with the government, Greenberg said he planned to sell some of his shares in the company.


AIG repays more of $85 billion Fed loan
(APW_ENG_20081107.0388)
1) American International Group Inc. reduced the amount it owes the U.S. government by another $2.3 billion as the insurer continues to use the Federal Reserve's new commercial-paper-funding program.
2) The updated figures come as reports circulated Friday that New York-based AIG may receive less stringent loans terms.
3) Shares of AIG jumped 26 cents, or 13.9 percent, to $2.13 in late afternoon trading.
4) The Wall Street Journal said Friday that federal officials were considering a possible change in the terms of an $85 billion loan made to AIG in September.
5) AIG spokesman Joseph Norton declined to comment on the report, but said "AIG continues to work on its plan to find a permanent solution to its liquidity losses, to sell assets so it can repay the Federal Reserve loan with interest and to explore other avenues to help AIG restore its financial health."
6) Federal Reserve Bank of New York spokesman Andrew Williams also declined to comment.
7) Reports said an announcement could be made as soon as this weekend or on Monday when AIG announces third-quarter results.
8) Figures released by the Federal Reserve Thursday showed that as of Wednesday, the government has loaned AIG $81.2 billion under two emergency facilities that were to help the company stave off bankruptcy. That figure was $83.5 billion a week ago.
9) In September, the Fed said it would provide AIG a two-year, $85 billion loan at an interest rate of about 11.5 percent. In return, the government received a 79.9 percent stake in AIG and the ability to remove senior management.
10) The central bank later said it would loan the company an additional $37.8 billion.
11) Last week, AIG said it would be able to access up to an additional $20.9 billion under the new commercial-paper-funding-facility program.
12) In total, the government has put about $144 billion at AIG's disposal.
13) By using the commercial-paper program from the Fed, AIG has been able to reduce the amount it had borrowed under the original $85 billion line of credit, Norton said.
14) As of Wednesday, AIG's borrowings under the $85 billion credit facility totaled $61 billion, down from about $65.5 billion a week ago. The total paydown in the past two weeks totals $9.1 billion.
15) In addition, AIG has drawn $19.9 billion under the $37.8 billion lending agreement, he said. That amount is up $2.2 billion from a week ago.
16) Although Norton would not provide details of the amounts borrowed under the new commercial-paper-funding facility, he did say the decrease in the $85 billion facility is "due primarily to AIG's access" to the program.
17) On Oct. 3, AIG said it would sell off certain business units to pay off the $85 billion loan. The company, however, said it plans to retain its U.S. property and casualty and foreign general insurance businesses. It also plans to keep an ownership interest in its foreign life-insurance operations.
18) Since then, no deals have been announced.


Fed ' s bailout for AIG swells to more than $150B
(APW_ENG_20081111.0026)
1) When the government offered an emergency loan to insurer American International Group in September, eyebrows shot up at the $85 billion price tag. Now it looks like pocket change.
2) The size of the AIG lifeline swelled to more than $150 billion on Monday, a record for a private company. But the head of the broader financial rescue package was cool to other companies reaching for a piece of the bailout pie.
3) The new AIG package includes a $40 billion chunk of the $700 billion financial bailout. It's the first time money from the big rescue bill has gone to any company other than a bank.
4) General Motors, Ford and Chrysler, burning through cash and bleeding jobs, are prodding the government for more help. The leaders of the House and Senate have urged Treasury Secretary Henry Paulson to get some of the $700 billion to the Big Three.
5) The automakers, covering all their options, are also pushing to get help as part of a new, multibillion-dollar stimulus package for the economy if Democrats push it through Congress when a lame-duck session convenes next week.
6) President-elect Barack Obama has said his transition team would explore options to provide relief to the auto industry, and President George W. Bush's press secretary said Monday the White House would "listen to" Congress if they try to help automakers.
7) Any money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.
8) Neel Kashkari, the interim head of the $700 billion bailout program, was cool to the idea of funneling the money to companies beyond banks and AIG.
9) "This morning's action with AIG was a one-off event necessary for financial stability. It is not the establishment of a new program," he said at a financial conference in New York.
10) In a separate development late Monday, the Fed granted the request of credit card company American Express Co. to become a bank holding company.
11) Although the new status will subject the company to greater regulatory scrutiny, American Express will also gain access to the Fed's emergency lending program. The company, which last month announced plans to slash its global work force, has been hard hit by the credit crisis as even the more affluent consumers the company caters to struggle to pay off their debts.
12) The original Fed loan to AIG was $85 billion, and the Fed added a $38 billion loan in October. But that has not been enough to firm up the company, which is so big and interconnected to other firms that its failure would devastate the economy.
13) Under the new plan, the Fed will provide $60 billion in loans. The Treasury will provide $40 billion to buy up preferred stock. And the government will spend close to $53 billion to buy up mortgage-backed assets and other AIG contracts on debt.
14) Total package: $153 billion. And AIG has also taken advantage of a federal plan to buy up short-term debt routinely issued by companies, known as commercial paper.
15) The $40 billion going to AIG will buy preferred shares of company stock, giving taxpayers an ownership stake. In turn, restrictions will be placed on executive pay at the firm.
16) The Fed stepped in with an $85 billion loan in September because the company is so big -- linked to mutual funds and retirement products held by millions of Americans, not to mention ties to U.S. mortgages -- that its failure would have devastated the economy.
17) "The bailout continues, and essentially exemplifies the notion of `too big to fail,' said Anthony Sabino, a professor of law and business at St. John's University. "But the question must be asked: Where does it end?"
18) AIG also came under fire for spending hundreds of thousands of dollars on a California retreat just days after the Fed loan was announced in September.
19) In other bailout news Monday, mortgage finance company Fannie Mae said it may have to tap a $100 billion government lifeline as early as next year after posting a massive third-quarter loss.
20) Fannie Mae, seized by federal regulators more than two months ago, posted a staggering loss of $13 per share for the July-to-September quarter, compared with a loss $1.56 a share, for the same period last year.
21) The company's net worth -- what it owns minus what it owes -- fell to $9.4 billion at the end of September, from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae said it would be required to tap Treasury for help.
22) The new package for AIG was unveiled as the insurer issued new, bleak quarterly results. It lost $24.5 billion in the third quarter after turning a $3.1 billion profit in the third quarter of 2007.
23) Under the restructuring, AIG also gets easier terms on the Fed loans, reducing the risk AIG will have to sell off assets at firesale prices to pay back the government.
24) "This is a very big deal for AIG. It essentially plugs two of the biggest holes that the company had," said Rob Haines, analyst at CreditSights.
25) Fed officials expressed confidence the money would eventually be repaid to taxpayers, and presidential press secretary Dana Perino said it would also be good for the fragile U.S. economy.
26) The federal help "will allow AIG to continue to restructure themselves in a way that will not hurt the overall economy. AIG is a large, interconnected firm," she said.
27) AIG Chief Executive Edward Liddy called the plan a "win-win."
28) "It sends a strong signal to our policy holders, to government, to regulators around the world, to our business partners and counterparts that AIG is in fact on the road to recovery," he said.


AIG restricts exec compensation, CEO gets a dollar
(APW_ENG_20081125.0958)
1) American International Group Inc. said Tuesday it is limiting how much it pays its top executives, including granting a $1 salary for this year and the same for 2009 to its Chief Executive Edward Liddy.
2) The decision is one of many broader moves made by the troubled New York-based insurer, which has been under pressure to restrict executive pay since accepting billions in government assistance to save it from collapse. AIG has received about $150 billion so far, more than any other company.
3) It was once the world's largest insurer with customers around the globe, and regulators feared the possible effect an AIG collapse would have had on the world's financial system.
4) The company said there will be no 2008 annual bonuses and no salary increases through 2009 for AIG's top seven officers and no salary increases through 2009 for the 50 next-highest AIG executives.
5) "We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders," Liddy said in a statement.
6) AIG shares fell 9 cents, or 5 percent, to $1.68 in midday trading.
7) The announcement comes after New York Attorney General Andrew Cuomo sent a letter to Liddy earlier this month saying AIG should be "completely transparent" about its compensation plans for 2008.
8) In mid-September, the Federal Reserve said it would offer two loans totaling $123 billion to AIG to help the insurer stave off bankruptcy. AIG was later allowed to access another $20.9 billion through the Fed's "commercial paper" program. And earlier this month, the government announced new financial assistance to the company.
9) In a letter to Cuomo on Tuesday, Liddy said AIG is "extremely grateful" for the support it has received from American taxpayers, and said the company does "recognize the obligation we have to use that support to help AIG recover, contribute to the economy and repay taxpayers."
10) AIG also said no taxpayer dollars will be used for any annual bonuses or future cash performance awards for AIG's top management positions.
11) Liddy, who joined the company in mid-September, will not receive an annual bonus this year or next, although he may be eligible for a special bonus for "extraordinary performance" payable in 2010, the company said.
12) Earlier this month, AIG ended 14 voluntary deferred compensation programs, resulting in $500 million of payouts due in the first quarter of 2009.
13) The company said it made the move to prevent employees from having to leave to collect deferred pay. The old plans had been set up so that employees could defer pay voluntarily and collect it when they left AIG, no matter the reason.
14) Several struggling financial institutions have announced in recent weeks that they are canceling bonuses for top executives, including Goldman Sachs, the Swiss bank UBS and the British bank Barclays.
15) Cuomo has praised those moves and suggested that other Wall Street institutions should follow suit, especially those receiving federal bailout money.


AIG looking at alternatives for government loan
(APW_ENG_20090224.1081)
1) Beleaguered insurer American International Group Inc. is apparently asking for its fourth loan from the federal government just days before it is expected to report a fourth-quarter loss.
2) The move could put more burden on U.S. taxpayers, as the government has already committed more than $150 billion.
3) The New York-based insurer wants to alter its $150 billion government bailout while it continues to look for buyers for some of its operations, according to published reports.
4) Under a proposed plan, the government's primary loan to AIG totaling $60 billion would be repaid with a combination of debt, equity, cash and stakes in operating businesses, according to a story in The Wall Street Journal. The Journal, citing anonymous sources familiar with the discussions, said the sides have been working to revamp the loan since December.
5) The story comes a day after CNBC reported that AIG will soon post a $60 billion loss.
6) "Nobody knows what the final deal will look like at this point, assuming there is one," said Bob Hartwig, president of the Insurance Information Institute, a New York-based industry group. "What it sounds like is the Treasury and the Federal Reserve are struggling to craft a solution that will prevent additional problems from emanating from AIG and one that minimizes the impact on taxpayers."
7) AIG spokeswoman Christina Pretto declined to provide specifics about potential losses or changes to the company's government loans, but did acknowledge the company is reviewing alternatives with the government ahead of releasing its fourth-quarter results.
8) "We continue to work with the U.S. government to evaluate potential new alternatives for addressing AIG's financial challenges," Pretto said Tuesday. "We will provide a complete update when we report financial results in the near future."
9) It is expected AIG will report fourth-quarter results in the coming week.
10) The Federal Reserve Bank of New York, which is handling the government loan, declined to comment. The Treasury Department did not return requests for comment.
11) "They are continuing to report larger and larger losses, but whether they are continuing to lose money is another question," said Morningstar analyst Bill Bergman. "It's possible the losses that already have been incurred are significantly larger than even the numbers that are being rumored to be reported."
12) The company reported a third-quarter net loss of almost $25 billion in November.
13) At the same time, the U.S. government restructured previous loans provided to AIG, giving the company about $150 billion in total as part of a rescue package to help the company remain in business amid the worsening credit crisis. That package replaced earlier loans, including its first $85 billion loan back in September, after it became apparent the insurer needed more funds.
14) The loans, which gave the government about an 80 percent stake in AIG, were meant to buy the insurer more time to sell businesses and repay the government.
15) However, the deepening financial crisis has made it more difficult to find buyers.
16) "Its future is still highly uncertain in light of the majority ownership by the U.S. government," Friedman, Billings, Ramsey & Co. analyst Bijan Moazami wrote in a note to investors Friday.
17) Moazami dropped coverage of AIG, saying the company's predicament is so uncertain that "analysis of AIG is no longer relevant."
18) Problems at AIG did not come from its traditional insurance operations, but instead from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default.
19) AIG has been in the process of selling assets in an effort to raise more cash to help cover the government loans. Its latest sales might include a deal for its life insurance unit, called American Life Insurance Co. AIG is entertaining bids from MetLife Inc. and Axa SA for American Life, which operates in more than 50 countries, according to a Bloomberg report.
20) MetLife and Axa declined to comment Tuesday.
21) The sale of the life insurance operations would continue to help AIG as it tries to repay its government loans. As of Feb. 13, AIG had already sold interests in nine businesses.
22) However, Bergman warned: "A loss of confidence is something that has spread throughout AIG, including in its operating subsidiaries, so it's a little harder to sell them than it would have otherwise been."
23) The loan alterations being discussed with the government could include the U.S. taking control of some of AIG's assets instead of waiting for them to be sold off to repay the loans in cash, according to the Journal report.
24) AIG and the government are working on a revised plan in hopes of avoiding a potentially costly ratings downgrade for AIG, according to the Journal. If AIG's credit ratings were to fall, it would trigger massive payments to its trading partners, putting its fiscal position in an even more precarious position. A ratings downgrade might occur if AIG posts a fourth-quarter loss of $60 billion as some have predicted.
25) The initial problems at AIG in September were due in part to a ratings downgrade that triggered similar payments.
26) Shares of AIG fell 12 cents, or 23.2 percent, to 41 cents, in afternoon trading.


Insurance giant AIG facing possible breakup
(APW_ENG_20090227.1494)
1) Nearly six months after American International Group Inc. got its first massive bailout from the government, it is still stumbling.
2) The big insurer keeps losing money and is unable to sell some of its biggest assets. Some Wall Street analysts have stopped tracking it. And it appears on the verge of getting another helping hand from Washington.
3) Like Citigroup Inc., which on Friday received another round of federal support, AIG is considered too big and too important to fail.
4) "If the government lets AIG fail, I think you are going to see an enormous sort of shock wave across all industries because AIG had their finger in a lot of different areas," said Russell Walker, a risk management professor at Northwestern University in Chicago.
5) Expectations are that AIG and the government will announce soon, perhaps as early as Monday, their latest plan to prop up the New York-based company. Late Friday, AIG confirmed it will report its fourth-quarter earnings on Monday before the market opens.
6) The Financial Times, citing people who spoke on condition of anonymity, reported this week that the government will swap the 80 percent stake it currently holds in AIG for even bigger pieces of three units that would be split off from the company: AIG's Asian operations, its international life insurance business and its U.S. personal lines business. A fourth unit made up of AIG's other businesses and troubled assets could be created as well or sold off in pieces, according to the FT report.
7) In return for the breakup, the government would relax the terms, or cancel, a portion of the $60 billion loan that was at the center of a restructured $150 billion rescue package, the newspaper said.
8) The company may also need another loan, its fourth, from the government as it is expected to report a $60 billion fourth-quarter loss Monday.
9) AIG has been forced to seek more help because of a combination of factors including the recession and its falling stock price, now well under $1. Perhaps its biggest problem is the asset sales that were supposed to help the company pay back government loans aren't happening, in part because the credit crisis that initially landed AIG in trouble last summer is also preventing would-be buyers from getting financing.
10) "If companies actually have cash, or the ability to make a purchase, they are not jumping on AIG right now," said Donn Vickrey, an analyst with Gradient Analytics Inc. "The prudent thing for (companies) to do is just say 'no' at this point unless it's just an insanely cheap price."
11) That advice doesn't bode well for AIG, which said in October it would sell off business units to repay an original $85 billion loan from the Federal Reserve that it received a month earlier. The loan was reduced to $60 billion in November as part of the larger restructured rescue package totaling $150 billion; it had roughly $38 billion outstanding as of this week.
12) As of Feb. 13, AIG had already sold interests in nine businesses. But it needs to sell more.
13) "In ordinary times, the sale of these assets would have been relatively easy," said Bob Hartwig, president of the Insurance Information Institute, a New York-based industry group. "The inability to sell the assets today appears to be more of a function of the inability to finance the deals as opposed to interest in purchasing many of these assets."
14) According to analysts, AIG has been unable to solicit bids for some of its top units, including American Life Insurance, AIG's U.S. life insurance operation; American International Assurance, Asia's largest life insurer; International Lease Finance Corp., AIG's aircraft leasing subsidiary; and a broker-dealer operation called AIG Advisor Group.
15) The lack of interest can be seen in the company's stock price. Shares of AIG fell 10 cents, or 19 percent, to 42 cents Friday. Shares are down 96 percent since its first bailout was announced.
16) Some analysts have given up hope.
17) "Given the current problems and increased government involvement, it is an unanalyzable company," Stifel Nicolaus & Co. analyst Michael Paisan wrote in a note to investors Tuesday, adding he is ending his coverage of the company. "We have very little confidence in the ability to analyze future earnings."
18) Last week, Friedman, Billings, Ramsey & Co. analyst Bijan Moazami also dropped coverage of AIG, saying the company's predicament is so uncertain that "analysis of AIG is no longer relevant."
19) The government steps expected to be announced could put more of a burden on U.S. taxpayers, but the Obama administration may have no other option than to take a bigger interest in the beleaguered insurer.
20) On Friday, Citigroup agreed to give the government up to a 36 percent stake in the struggling bank, a move intended to strengthen its capital base. Citi has already received $45 billion in cash from the government.
21) Problems at AIG did not come from its traditional insurance operations, but instead from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default. The government maintains it needed to bail AIG out last September, saying the company's failure would have further disrupt markets and threaten the already fragile economy.
22) AIG's traditional insurance subsidiaries are widely viewed as safe. If AIG needed to file for bankruptcy protection, "AIG's insurance subsidiaries are separately capitalized and would continue to operate," Hartwig said.
23) In recent days, AIG has said that it's evaluating "potential new alternatives" to fix its problems. Exactly what those are, the company won't say.
24) "We continue to work with the U.S. government to evaluate potential new alternatives for addressing AIG's financial challenges," AIG spokeswoman Christina Pretto said Friday. "We will provide a complete update when we report financial results in the near future."
25) Hartwig said, "we don't know what the form of the deal might be," and added, "obviously there are hot and heavy negotiations going on."


US government extends new aid package to AIG, including fresh $30 billion ' as needed '
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1) The government on Monday unveiled a revamped rescue package to insurance giant American International Group and will provide the troubled company with another $30 billion in taxpayer money on an "as needed" basis.
2) The announcement came the same day as AIG, once the world's largest insurer, reported it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history.
3) The new package comes as the company has burned through cash and has been unable to find buyers for pieces of its company that it hoped to sell to repay the government on its existing aid package, which totals some $150 billion.
4) In an interview on NBC's "Today" show Monday morning, AIG Chairman and Chief Executive Edward Liddy said: "We're going to be able to pay back the Federal Reserve. The new $30 billion is a standby line. It's not necessarily something that we think we'll have to draw on right away."
5) But Liddy backed off earlier statements about paying back taxpayers in full within two years.
6) "It is clearly our goal. But we need some help from the financial marketplace," he said. "The Federal Reserve debt we'll pay back clearly in two years. And we'd like to make meaningful progress, paying back the original (government) investment."
7) Under the new package, the Federal Reserve will take stakes in two international units.
8) Instead of paying back $38 billion in cash with interest that it has used from a Fed credit line, AIG now will repay that amount with equity stakes in Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries.
9) It marked the fourth time the government has stepped in to help AIG. Its initial lifeline came in September, when the government effectively seized control of the company, taking just under an 80 percent ownership stake and replacing top management.
10) The new package is designed to enhance the company's capital and liquidity to facilitate the "orderly completion of the company's global divestiture program," the Treasury Department and the Federal Reserve said in a joint announcement early Monday.
11) The fresh $30 billion will come from the government's $700 billion financial bailout pot. AIG will be allowed to draw the money "as needed over time," the government said. The company received a $40 billion cash infusion from the bailout fund in November, when the government last revamped AIG's rescue package.
12) Meanwhile, AIG's credit line with the Fed was cut to roughly $25 billion from $60 billion.
13) All told, the net effect of the new bailout package provides AIG with an extra $30 billion, Treasury and Fed officials said.
14) Critics worry the government's bailout actions have the potential to put ever-more taxpayers' dollars at risk and encourage "moral hazard," where companies feel more comfortable making high-stakes gambles because the government will rescue them. The public has expressed anger over the situation.
15) In other relief, the revamped package reduces the interest payments AIG has to pay on its government loans. Government officials estimated that would save the company between $900 million and $1 billion a year.
16) The Treasury Department also will exchange its existing $40 billion in AIG stock to new preferred shares with revised terms that more closely resemble common equity. That conversion should provide a quick boost to AIG's capital position, government officials said.
17) Although the agreement still calls for AIG to pay the government a 10 percent annual dividend on the Treasury's shares, the decision to make the dividend payment will be at the discretion of AIG's board, government officials said.
18) Government officials said all the changes should make for a smaller, more viable AIG and put it in a better position to sell some of its businesses to repay the government. Government officials continued to insist U.S. taxpayers will be paid back. But they wouldn't map out a time frame as to when they believe that would happen.
19) Explaining its decision to provide fresh assistance, the Treasury Department and the Fed said AIG continues to face "significant challenges" due to the rapid deterioration in certain financial markets in the last two months of the year. "The additional resources will help stabilize the company and in doing so help stabilize the financial system," the agencies said.
20) AIG is a colossus on Wall Street and financial districts worldwide, with operations in more than 130 countries and $1 trillion in assets on its balance sheet.
21) The government initially intervened last year to help AIG because it deemed the company too big to fail. A collapse would wreak havoc on the entire financial system and the already stricken U.S. economy.
22) Besides life, property and other insurance offerings, AIG provides asset-management services and airplane leases. Its businesses also are linked to mutual funds, annuities and other retirement products held by millions of ordinary Americans.
23) But perhaps the biggest concern about AIG is the dizzying array of complex financial instruments it structured for commercial banks, investment banks and hedge funds worldwide -- many of which were directly or indirectly linked to the value of U.S. mortgages.
24) In its earnings report, New York-based AIG said it lost $22.95 per share in the last three months of 2008. It lost $5.3 billion, or $2.08 per share, in the year-ago period.
25) The latest results include $7.2 billion in unrealized losses and credit valuation adjustments at AIG Financial Products, the source of credit-default swaps, and pretax losses of $21.6 billion tied to the declining value of AIG's investment portfolio.
26) AIG's general insurance business reported $2.8 billion in net realized capital losses. General insurance net premiums dropped 16.3 percent to $9.2 billion, and net premiums earned fell 5.9 percent to nearly $11 billion.
27) Adjusted to exclude certain items, operating losses totaled $37.9 billion, or $14.17 per share, versus a loss of $3.2 billion, or $1.25 per share, last year.
28) The results drastically fell short of estimates. Analysts surveyed by Thomson Reuters, on average, forecast a loss of 37 cents per share on revenue of $24.82 billion. Analysts have been dropping coverage of AIG in recent weeks due to the uncertainty of the company's future.


Regulators shift blame for massive AIG failure
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1) U.S. lawmakers blasted state and federal regulators for dodging blame and keeping secrets after the failure of insurance giant American International Group Inc., which now has access to more than $170 billion in taxpayer money.
2) Calling AIG "the greatest corporate failure in American history," Sen. Richard Shelby on Thursday needled the New York state insurance regulator and representatives from the Federal Reserve and Office of Thrift Supervision about the lack of oversight leading to the company's collapse.
3) AIG on Monday reported a $61.7 billion quarterly loss, the worst in U.S. history. The same day, Treasury provided AIG as much as $30 billion in additional aid from the $700 billion financial bailout program.
4) The government effectively controls the insolvent company, with the Treasury Department owning up to 79.9 percent.
5) In turns apologetic and defensive, the regulators explained why their agencies weren't set up to oversee a firm like AIG, or why the company's problems were outside of their jurisdictions.
6) The toughest questioning fell on Federal Reserve Vice Chairman David Kohn. His appearance followed rare and withering criticism of AIG earlier this week from Fed Chairman Ben Bernanke.
7) "I share your concern, I share your anger," Bernanke told the Senate Budget Committee Tuesday. "It's a terrible situation, but we're not doing this to bail out AIG or their shareholders. We're doing this to protect our financial system and to avoid a much more severe crisis in our global economy."
8) Banking Committee Chairman Sen. Chris Dodd demanded to know Thursday which other banks had benefited from the billions of dollars AIG has spent winding down its credit-default swap business and other relationships. The swaps insure companies against losses on corporate bonds, but are not regulated like insurance. AIG was the top player in the multitrillion-dollar industry that played a major part in the financial crisis.
9) "The question is, who is actually being rescued?" Dodd asked Kohn.
10) Kohn refused to say who had been made whole after deals with AIG went bad, arguing that the information would undermine what little confidence remains in the financial markets.
11) "We need AIG to be stable ... and I would be very concerned that if we started giving out the names of counterparties, people wouldn't want to do business with AIG," Kohn said.
12) He defended the use of taxpayer money to repay other banks because "if we imposed losses on the counterparties for AIG," there could be disastrous ripple effects throughout the financial system.
13) AIG is so big and sprawling, so intertwined with institutions worldwide, that its downfall could set off a vicious chain reaction. Upheaval on such a global scale would plunge the U.S. economy deeper into recession, drive up unemployment and stifle hopes for an economic rebound any time soon.
14) Scott Polakoff, acting director of the Office of Thrift Supervision, told lawmakers his agency had relied on imperfect modeling and optimistic assumptions about AIG's credit-default swap business. But he also suggested the company's financial products division had furnished inadequate records for examination.
15) Kohn said the Fed had to swallow its distaste for AIG having "exploited" the strength of other companies.
16) "I share your frustration and the frustration of everybody else on this committee," Kohn said. "I wish with every fiber of my body that we didn't have to come in and do what we did."
17) But he said inaction could have forced more big banks to the brink of failure, and "we had no choice if we are to pursue our responsibility for protecting financial stability."
18) Dodd was not satisfied with the response. "Public confidence in what we're doing is at stake, and right now the public is deeply, deeply troubled by this," he shot back. "We're going to have an awfully difficult time ... if we can't get answers to this."
19) At Dodd's urging, Kohn agreed to take the senators' concerns to his fellow Fed governors.
20) Blaming the failure on AIG's financial products division, New York insurance superintendent Eric Dinallo said the solvency and capital requirements of the insurance companies "were done well and I'm proud of how the regulators maintained themselves."
21) Without the losses on financial products, "arguably AIG would be flourishing in this environment," Dinallo said.
22) But Shelby, the committee's ranking member, argued the problems stemmed from AIG's insurance business as well as the financial products.
23) "Are you trying to evade your responsibility?" Shelby asked. "You can claim here today that you have little responsibility if any for all these problems?"
24) AIG received a new $30 billion lifeline earlier this week, bringing the company's bailout to more than $170 billion since Sept. 16. The government also has adjusted the terms of AIG's loans to make the debt easier on the company's balance sheet.
25) Dodd said he had asked Treasury to send a representative to describe the department's relationship to AIG, but no one was available.
26) Treasury has been criticized for staffing up slowly as it deals with the largest financial crisis in generations. No top deputies to Treasury Secretary Timothy Geithner have yet been named.
27) AIG provides life, property and other insurance offerings, with 30 million policyholders in the United States alone. It also provides asset-management services and airplane leases.


AIG says it spent some bailout money paying banks
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1) American International Group Inc. on Sunday detailed how it used some of its $170 billion in federal bailout money, after the troubled insurer provoked outrage on Capitol Hill over its payment of tens of millions in executive bonuses.
2) Lawmakers on Capitol Hill have demanded that the identities of banks and other so-called counterparties that do business with bailed-out institutions be made public.
3) AIG said it used its $85 billion emergency loan from the Federal Reserve Bank of New York in September primarily to put up collateral for big foreign and domestic banks, including those which have received billions in government bailout money themselves, and to help meet securities lending obligations to banks.
4) AIG said that between the time it received the loan on Sept. 18, 2008 and the end of the year, the company's securities lending arm used $43.7 billion in public aid to meet obligations to banks, including $7 billion paid out to Barclays PLC, $6.4 billion to Deutsche Bank and $4.5 billion to Bank of America.
5) Other banks receiving between $1 billion and $3 billion from AIG's securities lending unit include Citigroup Inc., Merrill Lynch, UBS AG and Morgan Stanley.
6) AIG said it also put up about $22.4 billion in collateral for banks to meet obligations related to risky credit default swaps -- including $4.1 billion put up for Societe General, $2.6 billion for Deutsche Bank, $2.5 billion for Goldman Sachs, and $1.8 billion for Merrill Lynch, among others.
7) And $27.1 billion in payments made by Maiden Lane III, the unit AIG formed to buy securities underlying risky credit default swap contracts, included $6.9 billion to Societe Generale, $5.6 billion to Goldman Sachs and $3.1 billion to Merrill Lynch.
8) Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements. The company said it used the rest of the federal aid to fund its Maiden Lane business, repay debt and provide capital for some of its operations.
9) Federal Reserve spokeswoman Michelle Smith said in a statement Sunday that aid to AIG has helped all the counterparties, including individual policyholders, municipalities and pension funds, small businesses with insurance coverage and domestic and international companies and banks.
10) "We commend AIG for finding a balance between its concerns with confidentiality and the concerns of the public interest that may be served through the release of this information," Smith said. "The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses."
11) "I've been asking for this information for months. This is a good first step, but I'm concerned by how long it took,' said Rep. Carolyn Maloney, who is chair of Congress' Joint Economic Committee. "Transparency about the counterparties is essential to having an informed debate and developing solutions to our current economic crisis, as well as to Congress' ability to oversee the use of taxpayers' money."
12) The details from AIG come after the Obama administration and top Republicans voiced sharp criticism over $165 million in bonus payments AIG says it must make Sunday even as it accepts billions in federal aid. The contracts are part of a larger total payout which has been reportedly valued at $450 million.
13) In a letter to Treasury Secretary Timothy Geithner dated Saturday, AIG Chairman Edward Liddy said outside lawyers informed AIG that it had contractual obligations to make the payments and could face lawsuits if it did not do so.
14) Liddy said the company entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout.
15) AIG has agreed to the Obama administration's requests to restrain future payments.


Obama: AIG can ' t justify ' outrage ' of bonuses
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1) President Barack Obama on Monday issued a blistering attack on American International Group and pledged to stop the struggling insurance and investment giant from paying out millions in executive bonuses.
2) AIG has taken $170 billion in federal bailout funds, and the company announced over the weekend that it was bound contractually to pay out tens of millions in executive bonuses, prompting a storm of criticism inside the Obama administration.
3) The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million.
4) "It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.
5) "How do they justify this outrage to the taxpayers who are keeping the company afloat?," the president said.
6) Also Monday, New York Attorney General Andrew Cuomo told the company he wanted a list on his desk by the end of the day of employees set to receive millions of dollars in bonuses.
7) Cuomo said his office will investigate whether the employees were involved in the insurance giant's near-collapse and whether the $165 million in bonus payments are fraudulent under New York state law.
8) He later said AIG had missed the deadline and he was issuing subpoenas for the information.
9) AIG spokeswoman Christina Pretto told The Associated Press, "We are in contact with the Attorney General and will of course respond to his request."
10) AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.
11) Said Obama: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."
12) "This isn't just a matter of dollars and cents," he added. "It's about our fundamental values."
13) Noting that AIG has received substantial aid from the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."
14) Rep. Barney Frank, chairman of the House Financial Services Committee, earlier Monday charged that the move to pay bonuses amounted to "rewarding incompetence."
15) "These people may have a right to their bonuses. They don't have a right to their jobs forever," said Frank, a Democrat.
16) Frank noted that the Federal Reserve Board, using a Depression-era statute, was the institution that gave AIG its initial government bailout, before Congress passed legislation providing for additional assistance and said that not enough safeguards were built into the deal.
17) It also was revealed over the weekend that American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.
18) Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks -- France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.
19) The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
20) "We ought to explore everything that we can through the government to make sure that this money is not wasted," said Sen. Richard Shelby, a Republican, "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous."
21) AIG has agreed to Obama administration requests to restrain future payments. Geithner had pressed the president's case with AIG's chairman, Edward Liddy, last week.
22) "He stepped in and berated them, got them to reduce the bonuses following every legal means he has to do this," said Austan Goolsbee, staff director of Obama's Economic Recovery Advisory Board.
23) Obama did note in his remarks Monday that Liddy "came on board after the contracts that led to these bonuses were agreed to last year."
24) In an interview that aired Sunday on CBS' "60 Minutes," Federal Reserve Chairman Ben Bernanke did not address the bonuses but expressed his frustration with the AIG intervention.
25) "It makes me angry. I slammed the phone more than a few times on discussing AIG," Bernanke said. "It's -- it's just absolutely -- I understand why the American people are angry."
26) In a letter to Geithner dated Saturday, Liddy said outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.
27) New York's attorney general said in a letter to Liddy on Monday that he has been investigating AIG compensation arrangements since last fall and was disturbed to learn during the weekend of its bonus plans.
28) In addition to the list of people set to receive bonuses, Cuomo demanded details about who developed the bonus plans and a status report on whether payments have been made.
29) "Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system," Cuomo wrote.
30) Obama's comments on AIG came as he and Geithner announced a small business loan program and a series of temporary tax incentives. The small business package includes $730 million from the stimulus plan, with reduced small-business lending fees and an increase on the guarantee for some Small Business Administration (SBA) loans to 90 percent.
31) The government also planned aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market -- a key to making it easier for small businesses to borrow.


Obama berates AIG, vows to try to block bonuses
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1) President Barack Obama called AIG reckless and greedy during a blistering attack in which he pledged to try to block the insurance giant from handing its executives millions of dollars in bonuses after taking billions in federal aid.
2) The White House said it's looking at restrictions on some $30 billion in taxpayers' money approved to help American International Group as the administration tries to reclaim or block the huge bonuses the struggling company awarded its executives.
3) Obama on Monday joined other officials in criticizing AIG, the company that has quickly become the symbol for the ways in which America's federal bailouts have gone awry.
4) Obama expressed outrage at reports that AIG went ahead with $165 million in bonuses even though the company received more than $170 billion in federal rescue money. Obama directed Treasury Secretary Timothy Geithner to see whether there was any way to retrieve or stop the bonus money -- a move designed as much for public relations as for public policy.
5) "How do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama asked. "This isn't just a matter of dollars and cents. It's about our fundamental values."
6) A public backlash against Washington over the bonuses would make it tougher for Obama to ask Congress later for more bailout help -- and jeopardize other parts of the recovery agenda that has dominated the early weeks of his presidency.
7) With that in mind, the president and his top aides were working hard to distance themselves from the insurer's conduct, to contain possible political damage and to try to bolster public confidence in his administration's handling of the broader economic rescue effort.
8) Bailout steps for AIG totaling over $170 billion since September have effectively left the federal government with an 80 percent stake in the faltering insurance giant.
9) The financial bailout program remains politically unpopular and has been a drag on Obama's new presidency, even though the plan began under his predecessor, President George W. Bush. The White House is aware of the nation's bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.
10) David Axelrod, senior adviser to Obama, said in an interview with The Associated Press that there was no question that the public's anger over the bonuses could derail administration efforts to right the economy.
11) "People are angry because they've seen exhibit after exhibit of irresponsibility and people walking away with money in their pockets,"Axelrod said. "It's undermined the discussion that we have to have."
12) News that AIG still needs billions in taxpayer dollars to prevent a collapse did little to build public confidence, Obama aides acknowledged. Seeking to turn the public tide, White House spokesman Robert Gibbs aggressively criticized AIG and said administration officials were working to put strict limits on the next $30 billion installment bound for the company.
13) "Treasury has instruments that can address the excessive retention bonuses, and add provisions to ensure that taxpayers are made whole," Gibbs said.
14) Obama had scheduled a speech Monday to announce new help for recession-pounded small businesses, but first used the occasion to tear into AIG.
15) "This is a corporation that finds itself in financial distress due to recklessness and greed," Obama declared.
16) Axelrod called the bonuses "spectacularly tone-deaf."
17) He said the administration hoped the tough talk would result in voluntary action on the part of AIG and its bonus recipients, although that remains an open question. "All we can do is administer this thing going forward," he said.
18) A call to AIG's corporate headquarters in New York seeking comment was not returned immediately late Monday.
19) In a letter to Geithner over the weekend, the government-appointed chief executive of AIG, Edward Liddy, said the bonuses were legally binding obligations and the firm's "hands are tied."
20) On a separate track, New York Attorney General Andrew Cuomo said Monday he would issue subpoenas for information on the bonuses after AIG missed his deadline for providing details. Cuomo said his office would investigate whether the employees receiving bonuses were involved in AIG's near-collapse and whether the $165 million in bonus payments were fraudulent under state law.
21) AIG spokeswoman Christina Pretto told The Associated Press, "We are in contact with the attorney general and will of course respond to his request."
22) Obama's sharp words continued an insistent administration drumbeat over the past few days designed to pressure the bonus recipients to forgo them. Pressure was building on that issue -- and on the government to rework its AIG bailout to make sure the company repays as much of the $170 billion as possible.
23) So far, the company has been honoring its contracts with U.S. and foreign banks. The government agreed to uphold those contracts when it seized control of AIG in September, contending that failure would bring even worse global economic problems.
24) Obama was planning an appearance later in the week on Jay Leno's NBC talk show, perhaps to add a lighter touch to his efforts to show himself in command of efforts to resuscitate the economy.
25) The AIG bonuses were revealed over the weekend. It also was disclosed that AIG used $90 billion-plus in federal aid to pay foreign and domestic banks, some of which had received their own multibillion-dollar U.S. government bailouts.
26) The recipients included Goldman Sachs, at $12.9 billion, and three European banks -- France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans and which is now part of Bank of America, had received $6.8 billion as of Dec. 31.
27) The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
28) The AIG news overshadowed what Obama's aides had hoped to spend the first part of the week discussing: billions of dollars to help the nation's small businesses in the hopes of getting credit flowing again. Obama heaped praise on the little guys of American industry, often overshadowed in the blitz of government bailouts.
29) Obama's latest plan allows the government to spend up to $15 billion to buy the small-business loans that are now choking community banks and lenders. That, in turn, could allow those banks to start lending money again to small companies to invest, pay bills and stay afloat.
30) "You deserve a chance. America needs you to have a chance," Obama said in an appeal to all those who run small businesses or hope to one day.
31) Small businesses have created about 70 percent of the new jobs over the past decade, and as their credit lines have dried up, so has their ability to thrive or survive.
32) On Capitol Hill, House Republican leader Rep. John Boehner was unmoved. He called Obama's White House event "simply an attempt to provide political cover for the job-killing burden the president's budget would place on our nation's small businesses."
33) Two months into office, Obama's job approval rating is 61 percent, according to Gallup polling. That number has been relatively stable so far this month but has dropped from the 68 percent when the president took office. The major factor has been a decline in support among Republicans, from 41 percent to 26 percent.
34) A separate poll out Monday by the Pew Research Center put Obama's approval at 59 percent, slipping from 64 percent last month. The Pew poll found that a growing number of Americans see him as listening more to the liberals than to the moderates in the Democratic Party.


Outrage grows in Congress and out over AIG bonuses
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1) Livid Democrats threatened to tax away AIG executives' $165 million in bonuses as expressions of outrage swelled in Congress over the massive checks going to employees of a firm that has received billions in taxpayer bailout funds.
2) The scandal cast a pall over the White House as Republicans declared the Democrats were hardly blameless, accusing them of standing by while the bonus deal was cemented and saying that Treasury Secretary Timothy Geithner could and should have done more.
3) While the White House expressed confidence in Geithner and said his job was not in danger, it was clearly placing the responsibility for how the matter was handled on his shoulders. Geithner said he was working with the Justice Department to determine whether any retention bonuses paid by American International Group can be recovered.
4) Geithner sent a letter late Tuesday to congressional leaders informing them that he was working with the Justice Department to determine whether any of the AIG payments could be recovered. He cited a provision in the recent economic stimulus law that gave him authority to review compensation to the highest-paid employees of companies that already have received federal assistance.
5) Fresh details, meanwhile, pushed AIG outrage ever higher: New York Attorney General Andrew Cuomo reported that 73 separate company employees received bonus checks of $1 million or more last Friday. This at a company that was failing so spectacularly the government felt the need to prop it up with a $170 billion bailout.
6) The financial bailout program remains politically unpopular and has been a drag on Obama's new presidency, even though the plan began under his predecessor, George W. Bush. The White House is well aware of the nation's bailout fatigue -- anger that hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.
7) The White House has faced questions about when, exactly, Obama learned about the AIG bonus pay. Officials said for the first time on Tuesday night that Geithner told the White House last Thursday, and senior aides informed the president later that day.
8) AIG chief executive Edward Liddy can expect a verbal pummeling Wednesday when he testifies before a House subcommittee.
9) On Capitol Hill late Tuesday, House Democrats directed three powerful committees to come up with legislation this week to authorize Attorney General Eric Holder to recover massive bonus payments made by companies like AIG.
10) Senate Democrats, meanwhile, suggested that if the AIG executives had any integrity, they would return the $165 million in bonus money. One leading Republican even suggested they might honorably kill themselves, then said he didn't really mean it.
11) Whatever the process, lawmakers of all stripes said, the bonus money belongs back in the government's hands.
12) "Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.
13) "If you don't return it on your own, we will do it for you," echoed Chuck Schumer of New York.
14) Not all Democratic leaders were racing in that direction. Penalizing people with the tax code is inappropriate, declared Rep. Charlie Rangel, chairman of the taxwriting Ways and Means Committee. He said, "It's difficult for me to think of the code as a political weapon."
15) Others saw the connection as reasonable and relevant. House Financial Services Committee Chairman Barney Frank noted that the government, through the bailout, is now an 80 percent owner of the company and suggested that was grounds to sue to recover the bonuses.
16) There was a daylong rush to the television and radio microphones on Capitol Hill -- a bipartisan campaign to out-outrage each other.
17) Republican Sen. Chuck Grassley led the stampede with a statement Monday night on a radio show that AIG executives should either return the money or commit suicide in what he described as the Japanese style of taking responsibility. He spent much of Tuesday backtracking but still calling for corporate titans to take responsibility for grievous errors in judgment.
18) Japanese executives often take responsibility for scandals within their companies by issuing public apologies on camera and stepping down. It is rare, however, that business executives have gone so far as to take their lives. In feudal Japan, ritual suicide was considered an honorable death under the samurai warrior ethic.
19) AIG has received more than $170 billion from U.S. taxpayers. With bailouts in hand, AIG has paid out tens of billions of dollars to banks, municipal governments and other financial institutions around the world.
20) AIG is no stranger to controversy, nor is it the only publicly rescued company to give bonuses while being bailed out of financial ruin.
21) Merrill Lynch paid $3.6 billion in bonuses to its executives while its sale to Bank of America Corp., a big recipient of bailout money, was pending.
22) In recent months, AIG also has come under fire for a $440,000 weeklong retreat at the St. Regis Resort in California for top-performing insurance agents and a hunting trip in England.
23) The picture for AIG got no prettier Tuesday when subpoenas issued by New York Attorney General Cuomo revealed more details. He said the company last week had paid bonuses of $1 million or more to 73 employees, including 11 who no longer work there.
24) Cuomo said that despite their company contracts, the AIG employees agreed to take 2009 salaries of $1 in exchange for receiving their bonus packages. And he said the fact that AIG could negotiate the terms of the payments "flies in the face of AIG's assertion" that it had no choice but to make the contractual bonus payments.
25) Administration officials said Geithner did all that he legally could to avert the payments.
26) Geithner urged Liddy last week to renegotiate the contracts that called for the bonuses.
27) "He recognized that you can't just abrogate contracts willy-nilly, but he moved to do what could be done," Larry Summers, Obama's chief economic adviser, told The Associated Press in an interview Tuesday.
28) Though AIG's bonus plans were disclosed last year, Congress' outrage and threats have begun pouring forth only recently.
29) At least three Democratic bills and one Republican measure were introduced to crack down on the Treasury Department and stiffen rules for recipients of bailout funds.
30) The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.
31) The Obama administration said it was trying to put strict limits on how future government bailout dollars could be used, and Reid on Tuesday said he urged the administration to step up its pace on that.


Obama envoy Holbrooke once served on AIG ' s board
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1) Obama administration special envoy Richard Holbooke was on the American International Group Inc. board of directors in early 2008 when the insurance company locked in the bonuses now stoking outrage across the U.S.
2) Holbrooke, a veteran diplomat who is now the administration's point man on Pakistan and Afghanistan, served on the board between 2001 and mid-2008. During that period, AIG undertook the aggressive investment strategies that led to a near-collapse and forced a multibillion-dollar federal bailout.
3) President Barack Obama has insisted his administration was not responsible for AIG's financial woes, and a White House spokesman said Thursday that Holbrooke was unaware of AIG's decision to award retention bonuses to key employees.
4) "Mr. Holbrooke had nothing to do with and knew nothing about the bonuses," spokesman Tommy Vietor said.
5) Close to $165 million in bonus money was paid last weekend.
6) It remains unclear whether AIG's decision to grant the bonuses ever came before the board. A Holbrooke spokesman declined comment, referring calls to the White House.
7) Obama named Holbrooke as a special envoy on Jan. 22, two days after taking office. Vietor said administration officials were aware of Holbrooke's work for AIG during background checks this year -- when AIG already had benefited from federal intervention.
8) "Disclosure of past board membership is part of the vetting process," Vietor said.
9) Holbrooke was U.S. ambassador to the United Nations during the final two years of the Clinton administration and architect of the 1995 accord that ended the war in Bosnia.
10) Holbrooke joined AIG's board in February 2001 and resigned in July 2008, two months before the company nearly collapsed. Over more than seven years as a board member, he may have earned as much as $800,000 in cash and company stock, according to AIG financial documents filed with the Securities and Exchange Commission.
11) Since September, AIG has received $180 billion in taxpayer money to keep it from failing and causing more damage to the U.S. economy.
12) An AIG spokesman did not respond to telephone calls and e-mails Thursday.
13) Obama this week blasted AIG for what he described as the company's reckless course. He also defended his administration's handling of the company's rescue.
14) "Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in," the president said.
15) Vietor said Holbrooke "has not discussed AIG with the president, Treasury or any other member of the administration."
16) AIG chose to approve the executive bonuses in the spring of 2008 "despite obvious signs the 2008 performance would be disastrous in comparison to the year before," New York Attorney General Andrew Cuomo wrote the House Financial Services Committee on Tuesday. Cuomo's office is investigating AIG's executive compensation programs.
17) For large companies such as AIG, boards of directors are typically made up of high-profile figures from business and academia.
18) Boards are expected to give the company's top leaders unvarnished advice. But with AIG on life support, the quality of the guidance the company received from its board is under fire.
19) "The role of a board is to keep a company from going over a cliff," said Robert Litan, an expert on financial institutions at The Brookings Institution in Washington. "I wouldn't be surprised if, in a future lawsuit, a court were to find the (AIG) directors behaved negligently."
20) For much of tenure on the AIG board, Holbrooke had a role in approving salaries and compensation. From 2001 until mid-2005, he was a member of the board's compensation committee. According to AIG financial statements, the committee sets the salary for the company's chief executive officer and gives advice on how other senior managers are to be compensated.
21) Holbrooke also led the board's public policy and social responsibility committee from 2005 through July 2008. The committee assesses how political and public policy issues might affect the company's business operations, performance and corporate reputation, according to AIG.
22) The actual amounts Holbrooke received as an AIG board member are difficult to pinpoint. Before 2005, the SEC reporting requirements did not call for dollar figures to be attached to the stock and option awards for directors. AIG stock awarded for board service may now be worth far less than the value it had originally.
23) According to the SEC filings, AIG paid Holbrooke $267,943 in fees and stock awards in 2007; he was paid $232,865 in 2006. Compensation figures for the six months he was on the board in 2008 are not yet available. By prorating his 2007 compensation, he could have earned about $107,500 in directors fees and stock.
24) Between 2001 and 2005 the records indicate he earned $200,000 in director's fees. He also received 2,400 shares of AIG stock and options to purchase 10,000 more during that period.


Former AIG head denies he started bonuses
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1) Former AIG chief executive officer Hank Greenberg said the company under his leadership never had the kind of retention bonus system that has subjected it to withering criticism.
2) "When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance."
3) Greenberg's interview was broadcast on CBS television's "The Early Show" a day after the Democratic-led House of Representatives approved a bill that would impose punitive taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.
4) "We want our money back and we want our money back now for the taxpayers," declared the leader of the House, Speaker Nancy Pelosi, a Democrat..
5) The bonuses, totaling $165 million, were paid to employees of the troubled insurer, including to traders in the financial unit that nearly caused the company's collapse.
6) "Mr. Greenberg is again trying to re-write history in order to distance himself from the Financial Products group he personally created and oversaw," AIG spokesman Mark Herr said in an e-mail Friday. "The fact is that, under his watch, guaranteed compensation arrangements for (Financial Products group) employees were put in place."
7) On Wednesday, the current chairman and chief executive of AIG, Edward Liddy, told Congress under oath that his predecessor was responsible for the financial problems the company now is experiencing, saying mistakes had been made on a scale few could have imagined.
8) There have been two other executives at the top of AIG since Greenberg left and Liddy took charge.
9) Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.
10) Former Citigroup Inc. executive Robert Willumstad took over from Sullivan in June, and was succeeded in September by Liddy, former chairman of Allstate Corp.
11) In his CBS appearance Friday, Greenberg was asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. "Absolutely not," he told the interviewer.
12) Greenberg also said he didn't think Liddy was qualified to run the company, but stopped short of calling for his firing.
13) "I think he should be replaced," he said. "You can call it what you want."
14) Greenberg has sued AIG, saying the company that he led for 38 years misled investors about its exposure to subprime mortgages and ruined his fortune by lying about its financial health.
15) The lawsuit filed earlier this month says Greenberg was the New York-based company's largest non-institutional shareholder. The company has said the suit is without merit.
16) Greenberg said that AIG once was "the greatest company in history." It had been the world's largest insurer with clients all over the globe.
17) "Was there fraud? Was there whatever. I think it's stupidity. Well, do you punish stupidity," he said.
18) The bill was passed on a 328-93 margin despite sharp Republican attacks calling it a legally questionable ploy to cover up Obama administration missteps on this issue.
19) House Minority Leader John Boehner, a Republican, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
20) Although a number of Republicans cast "no" votes against the measure at first, there was a heavy Republican migration to the "yes" side in the closing moments. The bill now goes to the Senate.


Protesters visit AIG officials ' lavish homes
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1) A busload of activists representing working- and middle-class families paid visits Saturday to the lavish homes of American International Group executives to protest the tens of millions of dollars in bonuses awarded by the struggling insurance company after it received a massive federal bailout.
2) About 40 protesters sought to urge AIG executives who received a portion of the $165 million in bonuses to do more to help families.
3) News of the bonuses last week ignited a firestorm of controversy and even death threats against AIG employees. The company, which is based in New York, has received $182.5 billion in federal aid and now is about 80 percent government-owned, while the national housing and job markets have collapsed as the country spirals into a crippling recession.
4) American International Group Inc. has said it was contractually obligated to give the retention bonuses, payments designed to keep valued employees from quitting, to people in its financial products unit, based in Wilton, Connecticut. Congress began action on a bill that would tax 90 percent of the bonuses, and the company's chief executive urged anyone who received more than $100,000 to return at least half.
5) AIG has argued that retention bonuses are crucial to pulling the company out of its crisis. Without the bonuses, the company says, top employees who best understand AIG's business would leave.
6) "We think $165 million could be used in a more appropriate way to keep people in their homes, create more jobs and health care," said protester Emeline Bravo-Blackport, a gardener.
7) She marveled at AIG executive James Haas' colonial house, which has stunning views of a golf course and the Long Island Sound. The Fairfield house is "another part of the world" from her life in nearby Bridgeport, which flirted with bankruptcy in the 1990s and still struggles with foreclosures and unemployment."
8) "Lord, I wonder what it's like to live in a house that size," she said.
9) Another protester, Claire Jeffery, of Bloomfield, said she's on the verge of foreclosure. She works as a housekeeper; her husband, a truck driver, can't find work.
10) "I love my home," she said. "I really want people to help us."
11) The company, in response to the protests, said all its employees were "working very hard to pay back the government and help the U.S. economy recover."
12) "The people working at AIG today are part of the solution, not part of the problem," company spokeswoman Christina Pretto said in an e-mailed statement.
13) Besides Haas' home, protesters on Saturday also visited the Fairfield home of AIG executive Douglas Poling. They were met both times by security guards. They left letters that acknowledged some executives, including Haas and Poling, are giving up the money but that asked them to support higher taxes on families earning more than $500,000 a year.
14) "You have a wonderful opportunity to help your neighbors in Connecticut," the letters said. "We ask you to consider the experiences of families struggling in this economy."
15) Afterward, the group protested at the office of AIG's financial products division in Wilton, where they waved signs and chanted, "Money for the needy, not for the greedy!"
16) There were no arrests.
17) Mary Huguley, of Hartford, said AIG executives should share their wealth with people like her sister, who is facing foreclosure.
18) "You ought to share it, and God will bless you for doing it," she said.
19) The protests came amid new questions about the retention bonuses. State Attorney General Richard Blumenthal said Saturday that documents turned over to his office by AIG appeared to show that the company paid $53 million more in bonuses to its financial products division than previously reported.
20) AIG said Blumenthal was wrong. It said the payments to which he referred had been made months ago and had been disclosed to the U.S Department of the Treasury.
21) In New York, the state Republican Party says the Democrat-controlled state government is ignoring calls for an investigation into a $100,000 donation to the state Democratic Party from American International Group days before officials initiated the bailout of the insurance giant.
22) State Republican Chairman Joseph Mondello accuses Democrats of a duck-and-cover response to disclosure of the donation, first reported Thursday by The Associated Press. Campaign finance records show AIG donated $100,000 on Aug. 29 to the Democrats, by far its largest donation to the party since at least 1999. Insurance Superintendent Eric Dinallo said he started negotiating with AIG and federal officials days later, but the governor hadn't been informed.
23) On Sept. 16, Gov. David Paterson in a televised news conference announced the "great news" that New York officials helped the giant insurer strike a historic loan deal with the Federal Reserve to keep AIG afloat.


AIG rescue bailed out banks at home, abroad
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1) The $165 million in bonuses paid by bailed-out insurer AIG have incensed politicians and the public in the United States. Some observers are grumbling over a far bigger payout: to the banks -- some of them in Europe -- which were rescued on their holdings of AIG derivatives.
2) Much of the $182.5 billion that US taxpayers stumped up to save AIG went out the door to meet the company's obligations on derivatives known as credit default swaps, winding up in the coffers of banks based in London, Paris and Frankfurt as well as those on Wall Street.
3) Even though American International Group, Inc. has had to be taken over by the government, the banks were paid what they were owed, instead of being asked to take a partial settlement.
4) It's that part that has some people complaining, since an AIG that entered bankruptcy proceedings would have only paid part, if anything. Additionally, others argue that foreign governments should have been asked to make at least some contribution to propping up their own banks.
5) Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks -- France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.
6) Edward Yardeni, an independent U.S. market analyst, described as "bizarre" the decision to pay AIG's counterparties in the U.S. and Europe for their derivatives contracts -- instead of negotiating to see if they would take less.
7) "We all know that in a free market you take your lumps," he said. "And when the government intervenes to fix things, there should be some penalty imposed."
8) AIG was rescued for fear its collapse would take down the world financial system and make the financial crisis far worse. AIG's rescue came after the US let investment bank Lehman Brothers go bankrupt -- an event that many now argue was a mistake that severely aggravated the financial crisis. Lehman counterparties had to line up in bankruptcy court to see if they could get a fraction of what they were owed.
9) European governments could have been asked to assist in the AIG rescue, given the threat of systemic risk to their economies, Yardeni said. "Why not call on the German government and others to pony up?" he said.
10) The controversy over bonuses and creditor payments has the U.S. House of Representatives considering a bill that would let the federal government seize non-bank financial companies and freeze their agreements, powers they didn't have when the Bush administration bailed out AIG.
11) A number of banking analysts and economists argue that once the US administration decided AIG was too big to fail, it was vital that the insurer make good on all its obligations, foreign and domestic.
12) "Once you've made the decision that AIG's not going to be defaulting, it seems to me you're paying back 100 percent on every obligation," said John Raymond, a banking analyst at CreditSights in London.
13) AIG built a murky, unregulated business selling credit-default swaps, which are in effect insurance policies for mortgage-backed securities and other debt held by banks. When the housing bubble popped and those securities went bad, AIG was left on the hook for billions of dollars.
14) The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
15) Facing tough questions from legislators Tuesday, U.S. Treasury Secretary Timothy Geithner said the government had "no legal mechanism" to force AIG's counterparties to take less than 100 percent of what they were owed.
16) "We didn't have the ability to selectively impose losses on (AIG's) counterparties," he said.
17) Many analysts and economists agree that there was no way to just pay U.S. counterparties of AIG, which did extensive international business.
18) "The importance of AIG stems partly from the fact that it did a lot of business with international counterparties," Raymond said, "If you then decide to bail it out, it's inevitable that a lot of the transactions that you honor are going to be with international counterparties or investment banks."
19) "It really wouldn't be feasible to decide they were going to rescue any US counterparty of AIG but that everybody else could just lose their money," said Douglas Elliot of the Brookings Institute. "There's not a legal form to do that, it's not good public policy."
20) Had the US not prevented AIG's bankruptcy "the whole system would have collapsed," said Kepler Capital Markets banking analyst Kirk Becker in Frankfurt.
21) Not all agree however that AIG had to be bailed out. "The losers are supposed to go bankrupt and go out of business so that healthier companies can survive," said Chris Edwards, an economist at the libertarian Cato Institute in Washington DC.
22) While Edwards opposed AIG's bailout from the beginning, the news that "billions of dollars went into the coffers of foreign banks" is further reason to avoid bailouts.
23) "I see no way that billions of dollars going to European and other non-American banks helps the US economy," Edwards said.


AIG exec resigns on NY Times op-ed page
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1) An American International Group Inc. executive who received a retention bonus worth more than $742,000 after taxes has resigned publicly -- in an Op-Ed column in The New York Times.
2) Jake DeSantis, an executive vice president at AIG's Financial Products division, said Wednesday he is leaving the company and will donate his entire bonus to charity. The letter, addressed to AIG's CEO, Edward Liddy, criticized Liddy for, among other things, agreeing to the payments but then calling the bonuses "distasteful" as he testified before disapproving members of Congress.
3) "We in the financial products unit have been betrayed by AIG and are being unfairly persecuted by elected officials," wrote DeSantis, who was head of business development for commodities. "In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself."
4) He added: "I take this action after 11 years of dedicated, honorable service to AIG. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so."
5) New York-based AIG has been heavily criticized by government offficials and the public after it awarded $165 million in bonuses earlier this month. The retention bonuses, payments designed to keep valued employees from quitting, were paid out whether the employee had a great year or a terrible one.
6) The bonuses were given to employees of the financial products division, a global unit that issued derivatives called credit default swaps that helped sink AIG as a whole last year.
7) "Ed deeply appreciates the frustration expressed in this letter and believes that the recent vilification and harassment of AIG employees is grossly unfair and unwarranted," wrote AIG spokesman Mark Herr in a statement e-mailed to The Associated Press.
8) Attempts to reach DeSantis were unsuccessful.
9) Two days after AIG received its first injection from the government in mid-September, AIG named Liddy, former chairman of Allstate Corp., as chairman and chief executive succeeding Robert Willumstad, who stepped down after three months on the job.
10) Liddy told Congress last week that the retention payments -- ranging from $1,000 to nearly $6.5 million -- were not his idea and called them "distasteful" Liddy himself is not getting a bonus and is only drawing $1 a year in salary. The bonuses were promised in contracts with employees that AIG signed early last year, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company.
11) "I have the utmost respect for the civic duty that you are now performing at AIG," DeSantis wrote in the letter. "You are as blameless for these credit default swap losses as I am." AIG had invested heavily in credit default swaps, extremely risky insurance contracts for bonds and other investments.
12) Even so, DeSantis said he is disappointed and frustrated over what he called Liddy's lack of support.
13) "I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our payments," DeSantis wrote in the letter, which was sent Tuesday to Liddy.
14) DeSantis noted that Liddy had decided to accelerate by three months the payout of more than a quarter of the bonus money. "That action signified to us your support, and was hardly something that one would do if he truly found the contracts "distasteful," he said.
15) Liddy told Congress last week that some of the employees were willing to give the money back, and on Monday, New York Attorney General Andrew Cuomo said 15 of the top 20 bonus recipients agreed to return their money. In total, about $50 million of the $165 million will be returned, Cuomo's office said Monday.
16) AIG has expressed concern that the company may not be able to attract and retain talented employees if they believe their compensation is subject to adjustment by the government.
17) An AIG spokesman said Monday that a "handful" of senior-level executives have resigned from the financial products division, and that there will likely be more resignations to come.
18) AIG came close to collapsing last September because it had gotten heavily into the business of insuring mortgage-backed securities, the risky investments that are at the root of the hundreds of billions of dollars in losses suffered by banks and other financial institutions around the world.
19) Since September, the government has given AIG $182.5 billion, maintaining that without help, AIG would fail, further disrupingt already stricken markets and cause more damage to the economy. In return for the aid, the government took a nearly 80 percent stake in AIG.


AIG managers in Europe leave amid bonus spat
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1) Two of American International Group Inc.'s top managers in Paris have resigned, just days after agreeing to return controversial retention bonuses.
2) The news of more dissension at AIG comes a day after Jake DeSantis, an executive in the insurer's financial products division, publicly resigned in an Op-Ed column in The New York Times. DeSantis said he plans to donate his bonus -- $742,000 after taxes -- to charity.
3) AIG said Mauro Gabriel, president and chief executive of Paris-based Banque AIG, and Jim Shephard, deputy CEO, resigned from their roles on March 20.
4) The men "resigned from their roles given shared concerns regarding their ability to conduct business in the current hostile environment toward Banque AIG and AIG Financial Product employees generally," AIG spokeswoman Christina Pretto said in an e-mail to The Associated Press.
5) AIG said both men have agreed to stay for a transition period, although for how long was not immediately known.
6) Pretto's e-mail came in response to a Wall Street Journal story that said the resignations of the Paris employees could spark defaults on $234 billion of derivative transactions unless replacements for the two executives are found, according to The Wall Street Journal.
7) "Given their commitment, we believe that the status of the Banque AIG derivatives book will remain unchanged and in good standing," Pretto said.
8) According to the Journal report, if AIG fails to find replacements for Gabriel and Shephard acceptable to French regulators, the regulators can appoint their own designee to manage the bank. Such an outcome could trigger defaults under the bank's derivative contracts since it would represent a change in control.
9) A default could set off a chain reaction costing financial firms, including European banks that did business with AIG, billions of dollars -- similar to what the U.S. government was trying to prevent when bailing out the giant insurer.
10) New York-based AIG has been heavily criticized by government officials and the public after it awarded $165 million in bonuses earlier this month. The office of New York Attorney General Andrew Cuomo has also been investigating the retention bonuses, or payments designed to keep valued employees from quitting.
11) The bonuses were given to employees of the financial products division, a global unit that issued derivatives called credit default swaps, which drove AIG almost to collapse last year. Once the world's largest insurer, AIG has received $182.5 billion in financial support from the government since September. Problems at AIG did not come from its traditional insurance subsidiaries, but from the problems at the financial products division.
12) The government stepped in to provide support because of fears that a collapse of AIG would trigger hundreds of billions of dollars in losses at financial institutions worldwide, further crippling the already battered credit markets.
13) Cuomo's investigation has expanded beyond just looking at the bonuses paid to employees in the financial products group to the derivative products it originated, how it wrote contracts surrounding the products and its process of unwinding the deals. Cuomo's office has been routinely investigating bonus payments at companies that received government funds.
14) On Thursday, Cuomo's office issued a subpoena to AIG requesting information about the products that led to the unraveling of AIG, such as credit default swaps -- essentially insurance against default on mortgage-backed securities and other risky debt.
15) The attorney general's office is trying to determine if repeated financial support from the government for the beleaguered insurer in any way altered the unwinding of the financial products business, according to a person familiar with the investigation who asked to remain anonymous because of the ongoing nature of the investigation. The investigation includes trying to figure out if AIG's trading partners for the derivatives contracts ended up receiving more than they would have received from AIG had the government not stepped in to support it, the person added.
16) From the initial bailout, AIG has been working to unwind the positions in its financial products unit and sell off other businesses to help repay the government loans.
17) "Banque AIG and (financial product division) employees continue to successfully execute precisely the job asked of them: to de-risk and unwind the (financial product) business," Pretto said in the e-mail. "To date, they have reduced the trade count from 44,000 to 28,000."


Former AIG CEO criticizes successors, bailout
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1) The man who built insurance giant American International Group Inc. from a startup to a global behemoth said he didn't mismanage the company -- but the government did.
2) Following weeks of public and congressional outrage over largest corporate failure in U.S. history, Maurice "Hank" Greenberg, AIG's chief executive until March 2005, said taxpayers got a raw deal in the largest bailout of the financial crisis.
3) In his first testimony since the government stepped in with the first of four bailouts for AIG, Greenberg told the House Oversight and Government Reform Committee Thursday that his leadership team had "nothing to do" with failures that so far have cost taxpayers more than $182 billion.
4) But he spread blame generously across virtually every other party involved in the company and its rescue -- including subsequent management, federal regulators and ratings agencies.
5) An AIG spokesman disputed Greenberg's claims and lawmakers questioned the truthfulness of his testimony.
6) Since taking over the company, the government has left taxpayers with a nearly 80 percent stake "in a steadily diminishing asset" and no good exit strategy, Greenberg said.
7) The 83-year-old said he never would have made the disastrous decision to sell hundreds of billions of dollars in guarantees for corporate and consumer debt.
8) "When I left the company, it was a healthy company," Greenberg said, citing its strong earnings and share price at the time. He did not discuss liabilities AIG was accumulating on its balance sheet through derivatives and a securities lending business.
9) Greenberg blamed his successors for all of New York City-based AIG's problems. He said they recklessly abandoned "comprehensive and conservative" risk management procedures that he and his executive team employed.
10) "AIG's business model did not fail; its management did," Greenberg said. He went on to criticize their handling of the financial products division, which he said "functioned quite well" under his leadership.
11) That division wrote the notorious credit-default swaps that have forced the company to pay more than $50 billion to U.S. and foreign banks. Greenberg said the payments never should have been made. The financial products group's liabilities should have been "walled off" from AIG, and counterparties should have been given government guarantees instead of being paid full value for assets that now are worth much less, he said.
12) The swaps are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets against bond defaults.
13) Besides forcing AIG's rescue, they played a prominent role in the credit crisis that brought the downfall last year of investment firm Lehman Brothers Holdings and Merrill Lynch & Co. selling itself to Bank of America Corp.
14) "I think they got greedy," Greenberg said. "You would have thought that somebody, whether the president CEO or chairman would have called a halt" once AIG lost its triple-A credit rating.
15) In essence, AIG lent its credit rating to other companies for a small charge so they could reinvest money spent on securities backed by mortgages and other debt. When it lost that rating, it was forced to put up billions in collateral.
16) Refusing to accept blame for the failure to offset risk on billions of dollars in derivatives the company sold during his 38-year tenure, Greenberg said the division's most dangerous derivatives portfolio doubled in size in the nine months after he left.
17) AIG spokesman Mark Herr disputed those claims, saying Greenberg expressly approved the division's selling of the risky multi-sector credit-default swaps.
18) "He refuses to acknowledge that he approved entry into the credit default swap business, approved more than $40 billion of swaps written on (debt obligations) containing sub-prime loans, and didn't hedge or put up reserves against them," Herr wrote in an e-mail.
19) He also distributed a four-page memo detailing Greenberg's history of litigation and run-ins with regulators.
20) California Rep. Darrell Issa, the committee's senior Republican, said he doubted Greenberg's truthfulness given his involvement in numerous lawsuits related to AIG's failure. And longtime AIG critic Rep. Elijah Cummings rejected Greenberg's finger-pointing.
21) "I'm convinced that the systemic problems at AIG go far deeper than mistakes made in the four years since you left the company," Cummings said.
22) Still, Greenberg spent much of his testimony criticizing the government's plan to prop up AIG, calling it "highly controversial and downright puzzling."
23) "The goal of government should not be to liquidate large companies that have demonstrated they can succeed if properly managed," Greenberg said. "It should be to restore them so that they can be employers and taxpayers."
24) In a statement e-mailed late Thursday afternoon, Greenberg attorney Lee Wolosky defended his client's testimony. "AIG has launched a taxpayer-funded public relations campaign to try to blame Mr. Greenberg ... for massive losses that occurred" after he retired, Wolosky wrote.
25) AIG's largest shareholder is C.V. Starr & Co. Inc. Greenberg currently is that firm's chairman and chief executive. Greenberg and Starr have for years been the subjects of lawsuits and regulatory actions related to his tenure at AIG.
26) AIG has sued Greenberg for breaching his fiduciary responsibility by misappropriating shares held in trust for AIG's deferred compensation program. After Greenberg left, AIG paid $1.6 billion to settle a range of issues with regulators including the Securities and Exchange Commission, Justice Department and New York Attorney General.


Zurich Financial to buy AIG US unit for $1.9B
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1) Insurer American International Group Inc. said Thursday it will sell its car insurance unit, 21st Century Insurance, to Zurich Financial Services Group for $1.9 billion.
2) New York-based AIG is in the process of selling off a number of business units to help repay $182.5 billion in financial support from the government that it has received since September. The transaction is the largest divestiture by AIG since then.
3) Under terms of the agreement, Zurich's Los Angeles-based insurer Farmers Group will pay $1.5 billion in cash and $400 million in subordinated, euro-dominated capital notes backed by Zurich Insurance Company, AIG said. Farmers will also assume 21st Century's outstanding debt of $100 million.
4) To increase the capital at Farmers, Zurich is expected to raise $1.1 billion in a stock offering to institutional investors.
5) 21st Century, based in Wilmington, Delaware, includes the former AIG Direct business and Agency Auto business.
6) The company operates in 49 states and Washington, D.C. In 2008, 21st Century reported total premiums of $3.6 billion, including $2.7 billion in direct sales and $900 million through independent agents.
7) The transaction excludes AIG's Private Client Group, which provides property and casualty insurance to high net worth individuals.
8) Zurich has been seeking to grow its U.S. auto insurance business because it is a stable one that can balance out other, more-volatile business lines, according to Zurich Chief Executive James Schiro.
9) While Farmers Group already has an extensive network of agents, 21st Century focuses on selling direct to consumers via telephone and the Internet.
10) Meanwhile, AIG said Thursday it completed the sale of its wealth management arm AIG Private Bank Ltd. to Aabar Investments PJSC of Abu Dhabi.
11) Under terms of the agreement, the United Arab Emirates-based investment company paid about $253 million, and assumed about $55 million of intra-company loans outstanding to AIG Private Bank.
12) The deal, which was announced in December, is the fourth transaction AIG has closed in the past three weeks and one of 10 asset sale agreements it has reached in the past few months.
13) AIG Chairman and Chief Executive Edward Liddy said in a statement that AIG is "moving forward with discussions for several other transactions."
14) AIG is also trying to sell off other units, including International Lease Finance Corp., its aircraft leasing business.


AIG completes preferred stock sale to government
(APW_ENG_20090420.0586)
1) American International Group Inc. completed a sale of preferred stock and issued warrants to the Treasury Department as part of a previously announced plan to receive additional financial support from the government, according to a regulatory filing submitted Monday.
2) New York-based AIG said in the Securities and Exchange Commission filing that it sold preferred stock and issued warrants to the government on Friday in exchange for $29.84 billion. The new funds are now immediately available for AIG's use.
3) The additional funding was announced last month when AIG disclosed a fourth-quarter loss of $61.7 billion, the largest ever quarterly corporate loss in U.S. history.
4) As part of the deal, AIG must avoid bankruptcy and the government must remain the majority owner of the insurer. The agreement also restricts AIG's ability to repurchase stock and requires limits on corporate expenses, lobbying and executive compensation.
5) AIG has received four rounds of support from the government since the credit crisis mushroomed in September. AIG initially received loans totaling about $85 billion to help it remain in business. The government has since renegotiated the funding and expanded it. As part of AIG's financial support the government has taken a roughly 80 percent stake in the insurer. AIG has now received a package of loans from the government worth about $180 billion.
6) Separately, AIG delayed the filing of its proxy statement ahead of its annual shareholders meeting amid a potential reshuffling of its board of directors, according to a Wall Street Journal report citing anonymous sources. AIG is planning to expand and change the composition of its 11-member board, according to the report.
7) "We are in ongoing discussions regarding several issues and as a result have not yet filed our proxy statement," AIG spokesman Mark Herr told The Associated Press. "We intend to reschedule our annual meeting and will announce the new date in due course."


AIG sells Japan headquarters for $1.2 billion
(APW_ENG_20090511.0962)
1) Embattled insurer American International Group Inc. said Monday it is selling its Japanese headquarters to Nippon Life Insurance Co. for $1.2 billion in cash.
2) The transaction, which is among the biggest divestitures New York-based AIG has made to reimburse the U.S. government for its massive infusion of aid, is expected to close in the second quarter.
3) The 35-year-old building is 15 stories and sits on prime real estate in central Tokyo, next to the Imperial Palace. The property consists of about one acre of land, the company said.
4) AIG's roots in Japan extend back to 1946, and the company is now the country's biggest foreign casualty insurer.
5) "AIG is pleased to effectively monetize this asset within the context of its restructuring effort," AIG Chief Executive Ed Liddy said in a statement. Media reports last week discussed the possible sale of the building for around $1 billion.
6) Separately, an internal memo with the subject line "Seize the Future" cited by The Wall Street Journal noted AIG's turnaround may take some time.
7) In a memo dated April 23, an initiative code-named "Project Destiny" involved a 45-day review of the New York-based insurer's businesses that's supposed to lead to a multiyear restructuring plan, the report said.
8) AIG has received $182.5 billion in financial support from the government since September.
9) A large part of the memo, sent to employees by e-mail from Liddy, consisted of an update on the project by AIG Chief Restructuring Officer Paula Reynolds, according to the paper.
10) The project may be discussed at a Congressional hearing about AIG, scheduled for Wednesday, the report said.
11) AIG spokesman Mark Herr said the company regularly posts "Seize the Future" memos to employees, and a recent memo did discuss restructuring efforts by the company.
12) In an e-mail to The Associated Press, Herr noted, that in December Liddy said: "The U.S. government has put a five-year timeframe on our arrangements. Thus, we don't need to hold a 'fire sale.' So we are committed to identifying buyers that will honor our values and recognize the contributions of our people."
13) The U.S. government provided AIG with an $85 billion loan in September. As market conditions worsened and losses piled up at the insurer, the government revised and expanded its loan package to AIG several times. The package of loans now totals nearly $180 billion after being expanded in March when AIG reported a fourth-quarter loss of $61.7 billion, the largest ever quarterly corporate loss in U.S. history.
14) During the first quarter, AIG said it lost $4.35 billion, or $1.98 per share, compared with $7.81 billion, or $3.09 per share, during the same quarter last year.
15) As part of the loan package, the government has also taken a roughly 80 percent stake in the insurance giant.
16) Since its initial cash infusion, AIG has been working toward repaying part of the government loan by selling off business units. The company has said it plans to plans to retain its U.S. property and casualty and foreign general insurance businesses, and a stake in its foreign life insurance operations.
17) Last month AIG sold its car insurance unit, 21st Century Insurance, to Zurich Financial Services Group for $1.9 billion. The transaction is the largest divestiture by AIG since September, and one of 11 asset sale agreements it has reached the past few months.
18) Recent media reports have also said AIG may also be nearing a deal to unload its airplane leasing business, International Lease Finance Corp.
19) In March, AIG said it would spin off AIU Holdings, its property and casualty insurance business, and give the company its own board of directors, management team and brand distinct from that of the embattled company, which has also been embroiled in controversy surrounding bonuses paid to employees. In April, AIG transferred AIU Holdings to what's known as a special purpose vehicle in preparation for the potential sale of part of the business.
20) Shares of AIG fell 6 cents, or 3 percent, to $1.95 in afternoon trading Monday.


US lawmakers question AIG plan, future
(APW_ENG_20090513.1242)
1) The government-installed head of AIG told Congress Wednesday the insurance giant is making progress toward repaying U.S. taxpayers by selling many of its foreign assets, but lawmakers questioned whether the plan makes sense and demanded details.
2) American International Group Inc. Chief Executive Edward Liddy said the company has reduced, but not eliminated, the risk its failure could pose to the global economy despite getting more than $180 billion in federal bailout aid.
3) "The assurance I can give you is we will do everything we can to not require more federal money" but that will hinge on how long the worldwide recession drags on and the condition of the financial markets, Liddy told the House Oversight and Government Reform Committee.
4) With the government owning a nearly 80 percent stake in AIG, lawmakers pushed Liddy on themes they said have angered many Americans: company secrecy, the payment of hundreds of millions in bonuses to employees and financial performance.
5) "What is the plan to repay the American people and does it have a realistic chance of working?" asked committee chairman Rep. Edolphus Towns, a New York Democrat. The excesses continue with AIG paying public relations executives up to $600 an hour in taxpayer money, he said.
6) "We think that the American taxpayer will be fully repaid" in three to five years under the company's plan, Liddy said.
7) Liddy agreed to provide portions of AIG's "Project Destiny" restructuring plan to the committee, but said details are sensitive and could hurt the company's ability to sell assets while unfairly helping its international competitors: ACE Ltd., Zurich Financial Services Group and Axa SA.
8) Jill Considine, one of three trustees charged with overseeing the government's interest in AIG, called the company plan "workable."
9) The trustees have asked Liddy to make a thorough review of AIG's compensation programs and to develop a new one. They also are seeking new board members for the company, who could be elected at a shareholders' meeting next month.
10) "We share the concerns about the payment of large bonuses at a time when AIG was failing and being rescued by the taxpayers," Considine said.
11) Considine and the other trustees -- Chester Feldberg and Douglas Foshee -- appeared separately from Liddy but also endured some harsh questioning from lawmakers.
12) "It's an inside deal," Rep. Marcy Kaptur told them angrily, citing their former and current ties to large financial institutions.
13) Towns asked whether it made sense to sell off AIG's assets in a bear market where prices are depressed.
14) New York-based AIG on Monday announced plans to sell its Japanese headquarters to Nippon Life Insurance Co. for $1.2 billion in cash. The transaction is expected to close in the second quarter.
15) Liddy said AIG doesn't intend to sell its assets at "fire-sale prices." AIG plans to retain its U.S. property-casualty and foreign general insurance businesses, and a stake in its foreign life insurance operations.
16) It was the second grilling before Congress in less than two months for Liddy, who was brought out of retirement by the Bush administration for a $1 annual salary to lead the hobbled insurance giant after it nearly collapsed at the height of the financial crisis last fall. Liddy is the former chairman and CEO of Allstate Corp.
17) AIG became one in a string of corporate calamities and a touchstone for public outrage. The huge volume of credit default swaps -- a form of insurance against bond defaults -- sold by AIG, coupled with rising levels of defaulted mortgage and other debt, threatened the company's existence and prompted the government to step in.
18) Government aid to AIG now totals $182.5 billion. Liddy pegged the company's current value at around $5 billion. AIG shares, which traded as high as around $70 in mid-2007, fell 21 cents, or 11.6 percent, to $1.60 Wednesday afternoon.
19) Liddy said the company has reduced its exposure to credit default swaps to $1.5 trillion, compared with the original $2.7 trillion, trimming its risk of failure.
20) Noting the company's fourth-quarter loss of $61.7 billion -- the biggest quarterly loss in U.S. corporate history, Rep. William Lacy Clay said "it appears that taxpayers are merely propping AIG up."
21) Liddy said the company has made progress. In the January-March quarter, the loss narrowed to $4.3 billion, compared with $7.6 billion a year earlier.
22) The $450 million in bonuses AIG paid to employees, including to traders in the financial products unit that brought it to the brink of collapse, fueled public and congressional outrage. The Democratic-led House approved a bill in March that would slap punishing taxes on big bonuses at AIG and other companies bailed out by taxpayers. The Senate didn't act on the plan, however.


AIG looks to spin off Asian insurance unit
(APW_ENG_20090518.0428)
1) American International Group is planning to spin off its Asian life insurance unit in an initial public offering as the faltering U.S. company seeks to repay billions in government bailout funding.
2) AIG is taking steps to list American International Assurance Company -- also known as AIA Group -- on an Asian stock exchange in a move that would turn the firm into a separate entity with its own board and management team, AIG said in a statement Sunday.
3) Timing of the listing depends on market conditions and regulatory approval, the company said.
4) AIA is among the region's leading insurers with more than 20 million customers and more than $60 billion in assets.
5) Last week, AIG Chief Executive Ed Liddy told Congress the insurance giant is making progress toward repaying U.S. taxpayers by selling many of its foreign assets, and does not need more bailout money.
6) New York-based AIG has received $182.5 billion in financial support from the government since its near collapse in September threatened the stability of the global financial system and worsened the economic recession.


With Liddy leaving, AIG revamp reaches new phase
(APW_ENG_20090522.0739)
1) After creating a plan to radically alter American International Group Inc.'s operations to help repay billions in government loans, chairman and chief executive Edward Liddy is leaving his vision for the insurer in the hands of a whole new set of managers.
2) On Thursday, Liddy said he was stepping down at a time when AIG will add six new directors to its board and is reshaping itself by spinning off or selling large parts of its operations.
3) With a major shake-up among its decision makers, new management will have the opportunity to continue with Liddy's plan to further reshape the company, or put their own stamp on how to create a leaner, more efficient AIG.
4) "There's no question there's an enormous challenge in digesting a new board structure with a new CEO," said James Post, a professor of corporate governance and ethics at Boston University.
5) Once the world's largest insurer, AIG is already a dramatically different company than it was when the government first bailed it out about eight months ago.
6) AIG has sold about a dozen assets, announced plans to spin off at least two major operating units and given up an 80 percent ownership stake to the government in exchange for a package of loans worth more than $180 billion.
7) In recent weeks, AIG has said it would spin off its Asian life insurance group known as American International Assurance Co., or AIA Group, and its property and casualty insurance business AIU Holdings.
8) AIG will continue to own majority stakes in the firms. The moves will also allow AIG to create new management teams and boards of directors for each of the businesses, meaning the new AIG managers stepping in will eventually cede oversight of some operations to even newer leaders.
9) The spin offs allow AIG to separate the still performing businesses from a parent company whose brand is likely hindering business. Being able to rebrand some of the operations while cashing in a portion of their market value could help further stabilize business while paying off the government loan.
10) AIG was saved from the brink of collapse in September when the government provided it with an initial $85 billion lifeline. At that time, Liddy was hand-picked to come out of retirement to manage the government's newest investment. Liddy had previously served as CEO of insurer Allstate Corp.
11) Including the initial loan, AIG has received four rounds of government support to help it remain in business amid fears that a full collapse of the insurer would create widespread devastation in the financial markets.
12) AIG was devastated not by the traditional insurance operations like those being spun off, but by its financial products business which underwrote risky credit derivatives contracts known as credit default swaps. The swaps are essentially insurance contracts protecting an investor against default on an underlying investment, such as mortgage-backed securities.
13) Rising defaults amid the underlying investments led to worries that AIG would not be able to cover all the outstanding swaps contracts and the effects would touch off a new, even more intense period of the credit crisis. That's when the government stepped in, fearing that without its help, AIG's collapse would cripple financial markets in the U.S. and around the world.
14) With the government backing the company, a reconstituted board will be elected next month at the insurer's annual shareholders meeting in New York. The first task for the board will be to work in coordination with government trustees to find Liddy's replacement. AIG said Thursday it is splitting the roles of chairman and chief executive, similar to what many other financial firms have done in recent months.
15) After picking a new CEO, the board will then turn its attention to continuing asset sales to repay the government. New managers will have to determine how to move forward with plans to spin off some operations and sell others, while retaining enough core businesses to try and return the insurer to profitability.
16) Aside from already announced deals, the new management could opt to sell business such as its aircraft leasing unit, International Lease Finance Corp.
17) "Whoever follows (as CEO) will really have a job of fashioning a new strategy of a downsized AIG," Post said.
18) Liddy's job was to streamline operations, sell assets and improve the insurer's balance sheet in the short-term, Post said. The next CEO, who will need strong experience, will have to continue to execute that strategy, he said. At the same time, the new executive will have to develop and implement a new, long-term plan to restore trust and confidence with consumers and maintain the company's viability as a smaller insurer all while repaying the government loans, Post added.
19) Regardless of whether Liddy's outline for the company is exactly followed, with so many new managers stepping in, the look of AIG is likely to be even more different in another eight months than it was last September when it was rescued.


Witnesses to testify in trial of former AIG CEO
(APW_ENG_20090616.0210)
1) Witnesses begin testifying Tuesday in the civil trial of American International Group Inc.'s former top executive, accused of plundering an AIG retirement program of billions of dollars.
2) Attorney Theodore Wells told jurors Monday in Manhattan that former Chief Executive Officer Maurice "Hank" Greenberg improperly took $4.3 billion in stock from the company in 2005, after he was ousted by the company amid investigations of accounting irregularities.
3) "Hank Greenberg was mad. He was angry," Wells said in U.S. District Court of the emotional state of the man who, over a 35-year-career, built AIG from a small company into the world's largest insurance provider. He said the saga is a story of "anger, betrayal and cover-up."
4) Wells said that Greenberg, within weeks of being forced out in mid-2005, gave the go-ahead for tens of millions of shares to be sold from a trust fund. The fund was set up decades ago to provide incentive bonuses to a select group of AIG management and highly compensated employees that they would receive upon their retirement.
5) Wells showed the jury several clips of Greenberg speaking on videotape about the responsibilities of the trust fund. He called it Greenberg's "videotaped confession."
6) Wells asked the jury to award AIG $4.276 billion and 185 million AIG shares.
7) Greenberg, 84, has contended through his lawyers that he had the right to sell the shares because they were owned by Starr International, a privately held company he controlled.
8) Greenberg's lawyer, David Boies, told the jury in his opening statement that a study of the documents in the case would prove that the shares sold by his client did not belong to AIG.
9) "I disagree with a great many things that Mr. Wells said," Boies told the jury.
10) "Look in this case not to what people said after this lawsuit started," he said. "Look to what they said and did and wrote before the lawsuit started."
11) Starr International was named after Cornelius Vander Starr, who created a worldwide network of insurance companies in the early 1900s.
12) AIG maintains that Starr and Greenberg, his protege and successor, decided in the late 1960s to organize the various companies under one holding company, AIG.
13) Starr International remained a private company and its shareholders decided in 1970 that the amount that its shares of AIG were worth above book value of about $110 million should be used to compensate AIG employees, AIG has said.
14) The embattled insurer is trying to reclaim the money from Starr it says was wrongly pocketed through stock sales by Greenberg.
15) The trial relates to events that occurred long before AIG found itself under attack earlier this year over its bonus program.
16) The company was roundly criticized after it accepted $182 billion in federal aid and then paid out $165 million in bonuses to employees, including traders in the financial products unit that nearly caused the company to collapse.
17) Before the jury was chosen Monday, U.S. District Judge Jed S. Rakoff said evidence in the trial could not include information about the government bailout. He also said the entire trial will last no longer than a month. Greenberg is among one of several witnesses expected to take the stand this week.
18) The trial features two legal heavyweights.
19) Boies argued on behalf of Democratic presidential candidate Al Gore before the U.S. Supreme Court during the disputed presidential vote in 2000. Wells was on the team of defense lawyers in 2007 for former White House aide I. Lewis "Scooter" Libby, who was convicted of perjury, obstruction and lying to the FBI about his role in leaking the name of a CIA operative to a reporter.


Correction: AIG trial story
(APW_ENG_20090622.0742)
1) In a June 18 story about American International Group Inc.'s lawsuit against Starr International, The Associated Press erroneously reported that both sides agreed at a July 2005 meeting to suspend a compensation plan for AIG employees. That meeting took place in May 2005, not July, and was only attended by Starr's voting shareholders.
2) Lawyers for Starr presented minutes from the meeting in court that said an agreement between Starr and AIG had been reached on suspending the plan, but the story should have reflected that AIG disputes that contention.


AIG moves to spin off 2 units, reduce gov ' t debt
(APW_ENG_20090625.0431)
1) American International Group is placing two subsidiaries into special units ahead of planned spinoffs. The move will help the insurer reduce the debt it owes the government by $25 billion.
2) AIG is spinning off two of its international life insurance units, American International Assurance and American Life Insurance.
3) Before the units are spun off through initial public offerings, they will be placed in special purpose vehicles. The government will receive preferred interests in the SPVs, which will be used as repayment of part of AIG's outstanding loan.
4) AIG currently has borrowed about $40 billion from the government.
5) The government rescued New York-based AIG from the brink of collapse last fall as the credit crisis worsened.


AIG moves to spin off 2 units, reduce US debt
(APW_ENG_20090625.0860)
1) American International Group Inc. said Thursday it will reduce outstanding U.S. loans by $25 billion by giving the government a preferred stake in two units that will be spun off from the insurance giant.
2) Embattled insurer AIG is placing two life insurance subsidiaries -- American International Assurance Co. and American Life Insurance Co. -- into special purpose vehicles ahead of planned initial public offerings.
3) As part of the plan, the Federal Reserve Bank of New York will receive preferred interests in the SPV's, which will eventually be independent companies once a public offering is completed.
4) The Federal Reserve Bank of New York will receive preferred interests worth $16 billion in American International Assurance and $9 billion in American Life Insurance. The preferred interests represent an undisclosed percentage of the estimated market value of the two companies, AIG said.
5) The stakes will cut AIG's outstanding debt owed on a credit facility with the Federal Reserve Bank of New York to $15 billion from $40 billion. It will also reduce the size of the credit facility available to AIG from the bank to $35 billion from $60 billion. That facility and the new stakes in the SPVs are part of a group of taxpayer-funded investments the government has made to help keep AIG from collapsing.
6) Aside from the credit facility from the Federal Reserve Bank of New York, AIG's loan package includes $40 billion it received from the Treasury Department last fall as part of the government's $700 billion Troubled Asset Relief Program. Another $30 billion in funding through TARP had not been drawn upon as of the end of the first quarter.
7) The government rescued New York-based AIG last fall as the credit crisis worsened. The government first extended AIG a loan package worth $85 billion in September. AIG was hurt not by its traditional insurance operations, but by its financial products business, which underwrote risky credit derivatives contracts.
8) As market conditions worsened and losses piled up at the insurer, the government revised and expanded its loan package several times. AIG now has up to $182.5 billion in funding available to it from the government.
9) Aside from the credit facility from the Federal Reserve Bank of New York, AIG's loan package includes $40 billion it received from the Treasury Department last fall as part of the government's $700 billion Troubled Asset Relief Program. Another $30 billion in funding through TARP had not been drawn upon as of the end of the first quarter.
10) In an effort to repay the government, AIG is selling some assets and spinning off others.
11) AIG first discussed a possible spinoff or outright sale of the two divisions in March. At the time, AIG said it would place American Life Insurance, known as ALICO, and American International Assurance, known as AIA Group, into SPVs.
12) ALICO is an international life insurance firm that operates in more than 50 countries around the world offering life and health insurance. AIA Group is an Asian life insurer with more than 20 million customers.
13) AIG will continue to hold common and preferred stakes in the two SPVs. It will raise additional capital, which could be used to further reduce the government loans, once it sells common shares in the two life insurers. AIG said the timing for the public offerings would depend on market conditions.
14) AIG has previously said it also plans to spin off AIU Holdings, its property and casualty insurance business.
15) Shares of AIG rose 4 cents, or 2.8 percent, to $1.46 in premarket trading.


AIG annual meeting a short, relatively calm affair
(APW_ENG_20090630.1034)
1) American International Group Inc.'s annual shareholder meeting ended without drama Tuesday after a handful of shareholders voiced disappointment over the embattled insurer's near-collapse last fall.
2) The meeting at the company's headquarters was relatively calm, and there was little outrage over the insurance giant's recent problems, in contrast to shareholder meetings this year for other financial firms that have relied on government support, such as Bank of America Corp. The meeting was also short, lasting less than an hour, well under Citigroup's six-hour gathering and four hours at Bank of America.
3) "I was expecting more of a crowd," said Kenneth Steiner of Great Neck, New York, who was one of about 80 shareholders other than employees in attendance. "With the stock as low as it is, I expected more from shareholders."
4) AIG shareholders have nearly been wiped out since the government provided the company with a lifeline last September at the height of the financial crisis. AIG was done in by underwriting risky financial derivative contracts, not its traditional insurance operations.
5) The government, which ultimately gave AIG a $182.5 billion bailout, now has an 79.9 percent stake in the insurer.
6) CEO Edward Liddy said the government may never relinquish its stake in the insurer.
7) "I can give you no assurances that it will ever change," Liddy said responding to a shareholder's question. He went on to say that a lower percentage of government ownership should increase the company's value.
8) AIG's share price has declined 89 percent since the government first bailed out the New York-based company in September. So far this year it has slid 15 percent.
9) AIG stock was down 16 cents, or 12 percent, at $1.17 in afternoon trading Tuesday.
10) During the meeting, Liddy reviewed AIG's plans to repay the loans it received from the government to help it remain in business.
11) Despite its near-collapse last September, Liddy said the insurer is "more stable than before."
12) "Repaying the government will happen," he said.
13) AIG is in the process of restructuring its business, shedding assets and cutting costs as part of a plan to repay the government.
14) On Tuesday it said it is selling the assets of a Taiwan-based subsidiary, AIG Credit Card Company (Taiwan) Ltd., to Far Eastern International Bank. Terms of the deal were not disclosed.
15) Last week, AIG said it was moving forward with plans to spin off two international life insurance subsidiaries, American International Assurance Co. and American Life Insurance Co.
16) All the company's proposals were approved during the meeting, except for one relating to the number of authorized shares; all shareholder proposals were rejected.
17) AIG had delayed its annual meeting, usually held in May, to give it more time to shuffle its board, which has been almost entirely reconstituted over the last year.


AIG loses big round in lawsuit against Greenberg
(APW_ENG_20090707.1272)
1) American International Group Inc. lost a big round Tuesday in its court battle against former CEO Maurice "Hank" Greenberg.
2) In an advisory decision, a federal jury in Manhattan found that a private investment firm controlled by Greenberg did not have to reimburse AIG for $4.3 billion in shares taken from a company retirement bonus fund in 2005, shortly after Greenberg was ousted as the insurer's CEO.
3) U.S. District Judge Jed S. Rakoff said he would issue a ruling in the case by the end of August.
4) "I give considerable weight to an advisory verdict, but in the end, it is something that the court has to determine for itself and I will make my own findings of fact and consultations of law," Rakoff said.
5) The jury deliberated for about half a day before issuing its decision.
6) The New York-based insurance giant had accused Greenberg, through a company called Starr International Co. that he controls, of plundering an AIG retirement program composed of $4.3 billion in stock. The questions raised during the civil trial boiled downed to who controlled the fund, and what its purpose was.
7) AIG has received $182.5 billion in federal aid since last fall, and the government has taken an 80 percent stake in the company. The company said it would use any proceeds from the trial to repay some of its loans from the government. The case was unrelated to the company's recent financial crisis.
8) The insurer's attorney, Theodore Wells, said only that he was "disappointed in the verdict." He had asked the jury to recommend that AIG receive $4.276 billion and 185 million AIG shares from Starr International.
9) Greenberg, 84, who testified during the first week of the trial that began June 15, was not present for the jury's decision.
10) David Boies, Starr International's attorney, said: "I think the quickness of the decision reflects the simplicity of the case. I would be hopeful that the judge would see it the same way the jury does."
11) Liz Bowyer, spokeswoman for Starr International, said the company was "gratified by the jury's quick and complete vindication of Starr International and Mr. Greenberg."
12) AIG charged that Greenberg had improperly taken the stock and then sold it out of anger over his ouster from the company in 2005 amid investigations of accounting irregularities. Greenberg's lawyers contended that he had the right to sell the shares because they were owned by Starr International.
13) Greenberg built AIG over his 35-year career from a small company into the world's largest insurer. Starr International remained AIG's largest shareholder until the government bailed out AIG last September.
14) AIG was on the verge of collapse after having lost billions of dollars because of risky investments, including mortgage-backed securities, made during the housing boom. Its insurance operations have been sound. Now, a number of its assets are up for sale as the company tries to gather cash to pay back the government.
15) Greenberg has criticized AIG since his 2005 ouster. During the trial, he continued his attacks on the managers who succeeded him, saying, "Things do change when you have a management that does not adhere to principles that would be good for AIG stock."
16) The stock, which traded in the $70 range two years ago, fell to below $1 in the past year. It closed at $13.61 Tuesday, but that price was boosted by a reverse stock split last week.
17) The fund at the center of the lawsuit was created during a reorganization of AIG in 1970 with $110 million worth of stock. Its value grew to $4.3 billion over nearly four decades.
18) Greenberg described the fund in several letters and speeches over the years as a retirement bonus fund for current and future employees -- a "kind of golden handcuffs." In one speech, Greenberg called the fund's creation "the most unselfish act in corporate history."
19) According to Greenberg and Starr International's lawyers, AIG never told auditors, shareholders, the Securities and Exchange Commission or insurance regulators that AIG employees were its primary beneficiaries. Instead, they claimed, Starr International was the beneficial owner of the stock.
20) It's such an unusual fund that even Greenberg acknowledged in a speech many years ago that it would not be able to be created under current U.S. tax law. Starr International is a Bermuda-based holding company.


AIG sells life insurance premium finance business
(APW_ENG_20090728.0670)
1) Insurer American International Group Inc. said on Tuesday that it closed the sale of its life insurance premium finance business for $679.5 million in cash.
2) AIG sold a majority of the U.S. life insurance premium finance portfolio of AIG Credit Corp. and A.I. Credit Consumer Discount Co. to First Insurance Funding Corp., a subsidiary of Wintrust Financial Corp. of Lake Forest, Illinois.
3) Upon meeting certain conditions, First Insurance Funding will also purchase an additional amount of certain specified life insurance premium finance assets for $61.2 million, AIG said.
4) The property-casualty premium finance business of A.I. Credit was not included in the deal.
5) During the credit crisis last fall, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the huge insurer. AIG is now shedding assets and cutting costs as it restructures.
6) Shares of AIG were unchanged at $13 in morning trading, while shares of Wintrust Financial lost 5 cents to $17.33.


AIG announces new chair, reports 2Q results Friday
(APW_ENG_20090806.1407)
1) Amid its ongoing restructuring and management shuffle, American International Group Inc. is about to provide some insight into how much it has recovered since it almost collapsed a year ago.
2) The insurer, which is now 80 percent owned by the U.S. government, reports its second-quarter results Friday. It has been working toward repaying government loans by selling assets and preparing to spin off others. Analysts say progress on those efforts as well as the insurer's ability to retain or attract customers for its insurance units will be the keys to whether the quarter is considered a relative success.
3) The company took another step toward its recovery Thursday, naming former American Express Co. Chairman and CEO Harvey Golub as its non-executive chairman, replacing retiring Edward M. Liddy. Golub, 70, was elected to the AIG board in May. He headed American Express from 1993 to 2001.
4) Golub's appointment was announced three days after AIG said former MetLife Inc. Chairman and CEO Robert Benmosche will take over as president and CEO from Liddy.
5) If AIG's recent share price surge is any indication, investors are becoming more optimistic that the company is finally beginning to find its footing. AIG jumped 53 cents, or 2.4 percent, to $22.53 after rising more than 60 percent on Wednesday.
6) Analysts, however, aren't about to get ahead of themselves.
7) "Things are getting better, it's just hard to know from what stance," said Bill Bergman, senior stock analyst at Morningstar Inc. in Chicago.
8) Standard & Poor's equity analyst Cathy Seifert said some of the share price gains could be from investors trying to cover short sales in case results are somewhat upbeat. A short sale is when an investor borrows a share of stock, sells it and then tries to buy it back at a lower price to make a profit.
9) The government provided AIG with an $85 billion rescue package amid the growing credit crisis last fall. Since then, the government has provided additional rounds of support. AIG's available loan package now totals $182.5 billion, though it has not tapped all the funds.
10) Liddy's departure was first announced in May and at the time it was also announced the CEO and chairman roles would be split, similar to what many financial firms have done over the past year. The former CEO of Allstate Corp., Liddy has served as chairman and CEO of AIG since the government rescued the insurer in September.
11) Golub and Benmosche will be stepping into a company in an unprecedented state of flux. AIG is trying to shed assets, spin off subsidiaries and raise money to help repay the government.
12) AIG is planning to spin off at least three of its major subsidiaries -- its property casualty and general insurance business as well as two life insurance units. The government is receiving preferred stakes in each of the life insurance units as part of AIG's loan repayment.
13) Although AIG could retain majority stakes in each of the spinoffs, separating the units allows them to create different management teams to operate the firms.
14) The spinoffs allow AIG to separate the still-performing businesses from a parent company whose brand is likely hindering business.
15) "It's very important that these companies are able to insulate themselves from AIG's taint," S&P's Seifert said. "It's the only way to hold onto franchise value."
16) Aside from the spinoffs, AIG has sold dozens of assets since December as part of its cash-raising efforts.
17) AIG's near-failure was not because of its basic insurance operations that it is now shedding, but instead by its foray into risky derivatives and other investments that helped cause the credit crisis.
18) Losses in the financial products division that wrote those contracts have likely continued to pile up. One of the problems still facing AIG is uncertainty surrounding that unit.
19) "It's so hard to know what those losses were in the first place," Morningstar's Bergman said. "We don't know the extent of the losses that are still there on the derivitatives books."


AIG reports 2Q profit, first since 2007
(APW_ENG_20090807.0889)
1) American International Group Inc. reported its first quarterly profit since 2007 on Friday, as the government-controlled insurer saw the value of some of its soured assets recover.
2) AIG said results at its core insurance operations fell during the second quarter due to the weak economy, a trend reported by other insurers. But investors appeared relieved by the company's report. AIG shares jumped $4.11, or 18.2 percent, to $26.64 in midday trading Friday.
3) AIG said it earned $1.82 billion. Of that, $311 million, or $2.30 per share, was attributable to common shareholders because the government owns 80 percent of the company after bailing it out last fall.
4) A year earlier, AIG lost $5.4 billion, or $41.13 per share.
5) Total revenue rose 48 percent, to $29.53 billion from $19.93 billion a year earlier.
6) Chairman and CEO Edward M. Liddy said in a prepared statement that company was still contending with the aftereffects of the company's near-collapse last fall. He said "performance trends stabilized from the first quarter," but added that AIG's financial results would continue to be volatile in future quarters, in part because of accounting charges related to its ongoing restructuring.
7) AIG now has received a government loan package worth up to $182.5 billion. The company is in the process of trying to sell off some of its assets to begin to repay the government money. It said in a filing with the Securities and Exchange Commission on Friday that it expects proceeds of about $8 billion from sales so far this year, giving it about $4.6 billion to begin repaying debts, including what it owes the government.
8) The company said its profit was driven by the stabilizing value of some of its riskier investments, including in its AIG Financial Products Corp. portfolio, the division responsible for many of the transactions that prompted the government bailout last fall.
9) AIG's near-collapse was due to risky contracts such as credit default swaps, which act as insurance to protect an investor against default on an investment such as a mortgage-backed security. The financial-products division was able to increase the value of remaining swaps on its books by $636 million during the quarter, thanks to improving credit markets. In the second quarter of 2008, AIG cut the value of those holdings by $5.57 billion.
10) AIG has been unwinding its derivatives, reducing the number it holds 36 percent to 22,500 as of the end of June. The value of those investments has been reduced by 13 percent to about $1.3 trillion, the company said. Still, many of the contracts are long-term so the company "expects that an orderly wind-down will take a substantial period of time," it said.
11) The company said operating income in its general insurance business, which includes property and casualty coverage, fell to $1 billion from $1.7 billion a year earlier, reflecting a 19.2 percent drop in premiums written, or new and renewed insurance contracts. Commercial insurance premiums written fell 18.2 percent.
12) AIG said its general insurance business was hurt by the recession and by higher payouts on catastrophic losses.
13) Its life insurance business had operating income of $1.8 billion, compared to a $2.4 billion loss a year earlier. AIG said it had fewer assets under managment, the result of the huge drop in the stock market over the past year, but that the recovery in the markets was improving the performance of that part of the company.
14) AIG's subsidiary International Lease Finance Corp., which leases aircraft to airlines, saw its operating profit fall to $335 million, from $352 million during the same period last year. The decrease was despite an increase in lease money as its fleet grew.
15) Liddy is stepping down amid the company's restructuring and management shuffle, with new President and CEO Robert Benmosche starting on Monday. AIG announced on Thursday that director Harvey Golub, the former chairman and CEO of American Express Co., will become non-executive chairman on Monday.
16) Liddy's departure was first announced in May, and at the time it was also announced the CEO and chairman roles would be split, similar to what many financial firms have done over the past year. The former CEO of Allstate Corp., Liddy has served as chairman and CEO of AIG since the government rescued the insurer in September.


AIG reaches deal to sell Indian IT unit to MphasiS
(APW_ENG_20090812.1275)
1) American International Group reached a deal to sell another unit on Wednesday.
2) The battered insurance giant will sell its AIG Systems Solutions Pvt. Ltd., an India-based company that provides information technology services to AIG companies around the world, to MphasiS, of Chennai, India.
3) MphasiS, a unit of Hewlett Packard's Electronic Data Systems, said about 39 percent of its revenue comes from financial services and insurance companies.
4) Terms of the deal were not disclosed. AIG Systems Solutions is based in Chennai and Kolkata and has about 800 employees.
5) The agreement was announced on the same day AIG said it will sell its Hong Kong finance business to a Chinese bank for $70 million in cash and $557 million in debt, and a day after the company said its financial products unit completed the sale of its energy and infrastructure investment assets.
6) AIG has been selling off parts of the company in an effort to raise money to pay back the U.S. government. The insurer received a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the huge insurer.
7) AIG shares closed up 41 cents at $25.33.


Federal judge dismisses lawsuit against AIG
(APW_ENG_20090821.1247)
1) A federal judge has thrown out one lawsuit against American International Group Inc. alleging it defrauded about 600 workers compensation insurance companies but another case, which is seeking class-action status, will move forward.
2) The dismissed case was filed by the National Council On Compensation Insurance Inc. on behalf of about 600 insurance companies that are members of the National Workers Compensation Reinsurance Pool.
3) In an order filed Thursday in the Northern District of Illinois, Judge Robert W. Gettleman dismissed the case, saying the NCCI lacked standing to sue AIG.
4) He noted that the dismissal doesn't mean the end of the litigation.
5) Safeco Insurance Co. of America filed a lawsuit on April 14, which was reassigned to Gettleman because it is related to the NCCI case.
6) "The court will examine the viability of proceeding as a class action in due course," he wrote.
7) He ordered the parties to appear on Sept. 4 for a hearing on the Safeco case and other matters involving the litigation against New York-based AIG.
8) AIG spokeswoman Christina Pretto said Friday the company is pleased Gettleman dismissed the NCCI's case and plans to fight Safeco's class-action complaint, saying it's "deficient for several reasons, and AIG intends to seek dismissal of that case at the appropriate time."
9) AIG also has filed a counter lawsuit against several insurance companies claiming they too engaged in similar activities of underreporting workers compensation premiums and "AIG will continue to pursue those claims vigorously," she said.
10) A spokesman for NCCI said the case is far from over.
11) "These claims will continue to be prosecuted as a class action or in another form to remedy AIG's admitted wrongdoing, to obtain a full and fair accounting by AIG, and to pursue all other available remedies," said Pete Wentz.
12) The roots of the dismissed case go as far back as 2005 when New York officials concluded that AIG had, over several decades, provided false reports of its workers compensation premiums to the NCCI and state tax authorities.
13) AIG issued a formal report detailing its unlawful conduct and acknowledged the unreported workers compensation premiums totaled between $300 million and $400 million annually, which gave AIG an unlawful benefit in the range of $60 million to $80 million or more a year.
14) The report admitted that AIG's reporting practices were unlawful and exposed it to civil liability and potential criminal prosecution.
15) AIG entered into settlement agreements in 2006 with several enforcement authorities, including a $1.6 billion settlement with New York and federal authorities.
16) The NCCI claimed that total damages to its member companies exceeded $1 billion and it sought fair compensation in the lawsuit, which it claimed the settlement did not accomplish.
17) The judge ruled the NCCI lacked legal standing to seek damages on behalf of the insurance companies.
18) Shares of AIG rose 85 cents, or 2.6 percent, to $33.15 in afternoon trading.


AIG shares surge on word of talks with Greenberg
(APW_ENG_20090828.0106)
1) Shares of American International Group Inc. surged Thursday as analysts speculated the company might be reconciling with former CEO Maurice "Hank" Greenberg, who could help bring private capital and other business benefits to the company.
2) Shares of AIG climbed further in after-hours trading and last traded at $48.40. It finished the regular session at $47.84, up $10.15, or 27 percent. The shares have traded between $6.60 and $493.60 in the past year. AIG completed a 1-for-20 reverse stock split on July 1.
3) More than 148 million shares changed hands, nearly seven times the 3-month average volume of 22.3 million shares.
4) Investor interest was fueled by the news that the company may be working to mend the strained relationship with Greenberg, who was forced out of the company in 2005 after an accounting scandal surfaced.
5) "It's not just that they're shaking hands with Greenberg, there's a real financial value in doing that," said Bill Bergman, senior stock analyst for Morningstar Inc. "Given the fact that AIG would have access to capital and business opportunities could be had, the reconciliation is meaningful."
6) A company spokeswoman did not immediately return a call seeking comment.
7) Early this month Greenberg agreed to pay a $15 million fine to settle fraud charges that alleged the company had engaged in deceptive accounting practices.
8) A statement released on his behalf said it was appropriate to put the matter behind him.
9) Greenberg, who built AIG over his 35-year career from a small company into the world's largest insurer, has been fighting AIG in court in an unrelated case over who controls an employee retirement fund.
10) A resolution in that case is expected by month's end with a judge's decision.
11) AIG was hit hard by the collapse of the home mortgage business. The insurance company had divisions that originated mortgages, insured them and was heavily invested in mortgaged backed securities and other instruments tied to mortgages, Bergman said.
12) The credit crisis sent AIG reeling and the U.S. government rescued the company from the brink of collapse with a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the company.
13) Signs of improvement in the housing market generally in the past few months are positive for the company, Bergman said.
14) The stock was mostly flat in July, trading below $15 a share, but has surged upward this month nearly tripling in value.
15) AIG is shedding assets and cutting costs as it restructures.
16) AIG's CEO Robert Benmosche said in an interview published Thursday by The Wall Street Journal that he is willing to wait as long as three years to sell off stakes in two life-insurance subsidiaries -- American International Assurance Co. and American Life Insurance Co.
17) He told the Journal that if AIG were to sell the units now, they would not fetch a fair price, making it more difficult for the company to pay back the government what it owes.


AIG agrees to arbitrate disputes with Greenberg
(APW_ENG_20090901.0028)
1) but greenberg, instrumental in aig's rise from a small firm to the world's biggest insurer, could have more to offer aig as an ally. rumors of improving relations sent aig shares surging last week.
2) "it does seem to be consistent with some recent signals we've had that the company and mr. greenberg are trying to settle their past differences," said bill bergman, senior stock analyst for morningstar inc. "i think underneath, once they come to some terms, greenberg brings a network of business opportunities and capital sources that can be help for aig right now."
3) the company, with former metlife inc. ceo robert benmosche newly installed at its helm, is trying to sell off assets to pay back the $182.5 billion in government loans it has received since the financial markets collapsed last september. NEW YORK (AP) -- A judge on Monday dealt a setback to American International Group Inc. in its legal fight with former CEO Maurice "Hank" Greenberg, ruling that a company he ran did not improperly seize AIG stock from an executive retirement plan.
4) Separately, AIG signaled it is looking to mend ties with its former chief executive, agreeing to settle their disputes through arbitration. A private settlement could head off the need for AIG to appeal the ruling, laying aside at least one distraction for the struggling insurer.
5) U.S. District Judge Jed S. Rakoff in Manhattan upheld an advisory jury decision from July, ruling the Greenberg-controlled investment firm Starr International Co. does not owe AIG $4.3 billion to cover stock taken from the retirement fund after Greenberg's ouster from AIG in 2005.
6) New York-based AIG claimed that the fund was held in an oral trust for use by company employees. Greenberg has argued he could sell the shares because they were controlled by Starr International.
7) "The law will not recognize such an oral trust unless the evidence of its creation is unequivocal," Judge Rakoff wrote Monday. "This is a burden that AIG has not come close to shouldering."
8) The company said Monday that its arbitration proceedings with Greenberg and former Chief Financial Officer Howard Smith will begin no later than Oct. 15 and conclude by March 31. Among the disputes to be settled is AIG's claim that Greenberg and Smith owe part of the $1.6 billion AIG has paid to settle a range of issues with regulators including the Securities and Exchange Commission, Justice Department and New York Attorney General. The company will consider whether to arbitrate its claims against Starr International after rulings on any final appeals are made.
9) AIG said the arbitration won't include any pending claims by AIG shareholders against Greenberg and Smith.
10) Greenberg was ousted from New York-based AIG amid an accounting scandal in 2005. The Securities and Exchange Commission charged both Greenberg and Smith with misstating the company's earnings.


AIG selling asset management unit for $500 million
(APW_ENG_20090905.0558)
1) American International Group Inc. said Saturday it reached a deal to sell a portion of its asset management business to a Hong Kong-based investment firm for $500 million.
2) The sale to Bridge Partners LP, which is owned by Pacific Century Group, includes about $300 million in cash at closing, additional future consideration that includes a performance note and a continuing share of carried interest.
3) The sale is just the latest for the troubled insurance giant.
4) AIG is trying to sell assets to repay billions of dollars in federal loans. The loan package, which helped the company avoid failing, was worth up to $182.5 billion.
5) The latest units being sold operate in 32 countries and manage about $88.7 billion of investments by institutional and retail clients, AIG said in a release.
6) AIG will retain its in-house investment arm that oversees about $480 billion of assets under management.
7) Win J. Neuger will continue as CEO of the units being sold and the existing management team will remain in place, the company said.
8) The transaction is subject to receipt of regulatory approvals.
9) Shares of AIG fell $1.70, or 4 percent, to $40.05 Friday, then fell another 32 cents to $39.73 in after-hours trading.


AIG shares jump after talk of bailout revamp
(APW_ENG_20090921.1005)
1) Shares of American International Group Inc. jumped more than 20 percent Monday after the head of the House Committee on Oversight and Government Reform said that panel will examine a plan to reduce the company's massive bailout package.
2) The stock surge occurred despite a report from congressional investigators that cast doubt on whether efforts by AIG to restructure its operations and fully repay the government the billions it received will ever prove successful.
3) Rep. Edolphus Towns, chairman of the House committee, will have that panel study a plan by AIG's former CEO Maurice "Hank" Greenberg to reduce and restructure the company's bailout package, a committee spokeswoman said Monday.
4) Towns, who has not spoken to the Treasury Department about the plan, met with Greenberg last week, the spokeswoman said.
5) Greenberg was ousted as CEO in 2005 amid an accounting scandal. He still holds millions of shares of AIG stock through a privately held investment company called CV Starr & Co.
6) Standard & Poor's equity analyst Catherine Seifert upgraded her rating on AIG's stock to "Hold" from "Sell" Monday, saying Towns' review of Greenberg's plan should boost the insurer's stock price in the near term.
7) Seifert raised her price target on the stock to $45 from $30.
8) AIG shares have been extremely volatile in recent months as investors bet on whether the New York-based company will be able to pay off its government debts and fully recover from the economic downturn. Its shares jumped $8.49, or 21.3 percent, to $48.40 Monday.
9) In a taxpayer-funded bailout, the Federal Reserve and Treasury Department have provided $182.3 billion to the insurance giant. The Government Accountability Office said that as of early September, AIG's outstanding balance of aid was $120.7 billion.
10) The GAO, in a report released Monday, found "some progress in AIG's ability to repay the federal assistance." But improvement in the company's stability depends on its long-term health, market conditions and continued government support.
11) The report concluded that "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."
12) Responding to the report, AIG spokesman Mark Herr said: "AIG remains committed to reducing risk and repaying taxpayers."
13) Fearing that AIG's collapse could take down the entire U.S. financial system and the broader economy, the Fed first came to AIG's rescue last September.
14) The original $85 billion aid package came one day after Lehman Brothers filed for bankruptcy, the largest in U.S. corporate history. AIG burned through the first lifeline, though, and continued to hemorrhage cash. It needed help three more times from the government, which owns about 80 percent of the company because of the bailout.
15) Congressional investigators acknowledged that the federal assistance has "helped stabilize AIG's financial situation." But they said the government remains exposed credit and investment risks that "could result in the Federal Reserve and Treasury not being repaid in full."


Treasury said to be unprepared on AIG bonus plans
(APW_ENG_20091014.0155)
1) The pitched drama over bonuses for bailed-out executives will be revived on Capitol Hill Wednesday as a government watchdog explains how some executives nearly brought down the financial system -- then pocketed millions.
2) Neil Barofsky, the special inspector general for the $700 billion financial rescue program, will answer questions about a new report outlining the official missteps that led to massive bonus payments for executives at insurer American International Group Inc.
3) In a report released Tuesday, Barofsky wrote that the Treasury Department did not understand AIG's byzantine pay structures when it gave the firm billions in aid last fall. The government has committed a total of more than $180 billion to wind down the New York-based insurance and financial services conglomerate, and now owns about 80 percent of the company.
4) AIG's bonuses sparked a political firestorm earlier this year when it was revealed that the government could not legally stop AIG from paying millions in bonuses even after taking billions in bailout money.
5) Barofsky's appearance is expected to recall testimony in March by Treasury Secretary Timothy Geithner, who was president of the Federal Reserve Bank of New York when AIG first was bailed out. The Federal Reserve provided AIG's first lifeline.
6) Geithner said at the time he had not known about nearly $1.75 billion in bonuses, retention payments and deferred compensation that AIG was contractually obligated to pay its workers. Millions went to employees in the unit whose bets helped sink the company.
7) Barofsky found no evidence that Geithner knew about the payments before March. But he wrote that it was a "failure of communication" for the top executive of the agencies overseeing AIG to be unaware of the payments.
8) AIG has asked employees to return some of the money voluntarily.
9) The report also said the Obama administration's pay czar has asked American International Group to withhold some of the millions in bonuses promised to its employees. Kenneth Feinberg, the special master for executive compensation, "has informally advised AIG not to pay the full $198 million" employees expect to receive, the report said.
10) Feinberg is locked in negotiations with the seven companies that received the most expensive taxpayer bailouts. AIG's was by far the largest. To secure its bailouts, AIG argued to Treasury that its failure would doom the broader financial system.
11) It took officials from the Federal Reserve Bank of New York months to untangle AIG's "staggeringly complex, decentralized" compensation structure, the report says. They eventually discovered 620 bonus programs totaling $455 million, and 13 retention plans allocating $1 billion.
12) The company is talking to Feinberg about matters "including future payments to employees of AIG Financial Products," spokeswoman Christina Pretto said in a statement. Employees have until the end of the year to return voluntarily some of the bonus pay they received in March, she added.
13) Barofsky's report recommends that Treasury work closely with officials from the New York Fed, which is funding parts of the AIG bailout. It also suggests Treasury improve oversight of companies that it owns, including reviewing compensation programs before buying major ownership stakes in companies.
14) In a written response, Herbert M. Allison Jr., Treasury's assistant secretary in charge of the government bailout, said the department is implementing the guidelines and "has no present intention" of buying another financial company.
15) "We welcome your comments and suggestions as Treasury continues to strengthen oversight of financial institutions" receiving government assistance, Allison wrote.


AIG shares slide; report speculates on brain drain
(APW_ENG_20091027.1036)
1) Shares of American International Group Inc. fell Tuesday as the company continues to face challenges in repaying government funds.
2) The insurer's recent loss of executives to the company of former CEO Maurice "Hank" Greenberg may further complicate its efforts to pay back more than $180 billion, a report published in The New York Times said Tuesday.
3) Shares of AIG fell $1.75, or 4.8 percent, to $34.50 in afternoon trading.
4) Pay restrictions imposed last week by the Treasury Department could hasten defections to Greenberg's company, C.V.. Starr & Co., a potential competitor operating under no such restrictions, the Times report said.
5) Treasury "pay czar" Kenneth Feinberg announced he had ordered seven companies that have received billions of dollars in taxpayer money, to slash the base salaries of their top executives by an average of 90 percent and cut total compensation -- cash, stock and perks -- in half.
6) That applies to the five top executives and the next 20 highest-paid employees at AIG, which is based in New York.
7) Analysts have questioned if the companies facing such pay restrictions could lose the top talent needed to help them regain solid footing.
8) Treasury spokesman Andrew Williams said in a statement: "We're acutely aware of this possibility and that's why Ken Feinberg spent hours and hours at AIG trying to understand that specific dynamic and strike the right balance with his determination."
9) In a prepared statement, C.V. Starr said it understands that a number of AIG's 100,000-plus employees have left to join direct competitors in the global property and casualty and life insurance businesses. Only 13 of those employees have joined C.V. Starr, the company said.
10) "The reason that employees are leaving AIG has less to do with these other companies, and more to do with the current approach to AIG, which is unlikely to result in the repayment of the American taxpayer," C.V. Starr said in a statement.
11) A representative from AIG declined to comment on the matter.
12) Greenberg served as AIG's chief executive from 1967 until he retired in March 2005 amid an accounting scandal. He is chairman and CEO of C.V. Starr & Co., an independently owned holding company with insurance agencies and a portfolio of global investments.
13) AIG was rescued nearly a year ago by the government with an initial package worth $85 billion. It then steadily increased the aid available to AIG to more than $180 billion as market conditions continued to worsen.
14) AIG was devastated not by its traditional insurance operations, but by its financial products business, which underwrote risky insurance contracts on investments tied to mortgages and other souring debt.
15) The insurance giant is 80 percent owned by the government and trying to shed assets and spin off divisions in an effort to pay back the massive government bailout. AIG has been slow to sell assets as it tries to get the best return for its still-performing insurance subsidiaries around the world.


AIG posts 2nd consecutive quarterly profit
(APW_ENG_20091106.0997)
1) AIG said Friday it was profitable for the second straight quarter as its core insurance operations continue to stabilize after the company's bailout by the government last year.
2) American International Group Inc. also said the amount of its government financial assistance dropped by 4 percent during the third quarter. Its results got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse.
3) While new insurance business stabilized compared with the second quarter, it is still sharply below year-ago figures as the economy remains weak and AIG struggles with its image after being bailed out by the government. A recovery in its core insurance operations is considered vital to AIG repaying the government.
4) CEO Robert Benmosche warned that earnings will remain choppy as the company executes its restructuring plan.
5) "We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities," Benmosche said in a statement.
6) AIG said it plans to record a $5 billion charge in the fourth quarter as it proceeds with spinning off two major life insurance businesses. The insurer is shedding American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO, as it looks to repay the government.
7) Shares of AIG fell $3.67, or 9.3 percent, to $35.61 in afternoon trading.
8) Len Blum, a managing partner at investment bank Westwood Capital, said "there is still tremendous risk" to owning the stock. AIG is still on very shaky footing because of the amount of changes it is undergoing and continued uncertainty about exactly how much it will be able to raise from selling assets, he said.
9) Blum said the market for selling big businesses like AIG is attempting remains weak because of the struggling economy.
10) AIG shares have been extremely volatile since the company was bailed out last year. Shares, whose price has been boosted by a reverse split, hit a low of $6.60 in March, rose as high as $55.90 in late August, and then slipped again.
11) "It's a casino gamble," Blum said of the stock.
12) AIG was bailed out in September 2008 by the government as the financial crisis spiraled out of control. The insurer has received aid packages with a total value of more than $182 billion from the government. In return for that financial support, the government received an 80 percent stake in AIG.
13) The company was undermined not by its traditional insurance businesses, but instead by underwriting risky credit derivatives contracts. A collapse in the value of those contracts was the primary driver of AIG's near-collapse.
14) Recovering financial markets and changes in accounting rules have helped AIG write up the value of its remaining risky assets.
15) Blum said, however, those assets could again lose value or AIG could be forced to take losses as it sells them off. AIG had $1.1 trillion in derivative contracts sitting on its books as of Sept. 30, many of which are tied to risky mortgage debt.
16) AIG has been working for the past year to sell assets and streamline operations in an effort to repay the government debt. As of Sept. 30, AIG's outstanding assistance from the government totaled $122.31 billion, down 4 percent from the end of the second quarter.
17) Of that outstanding assistance, AIG owes the government $85.66 billion in loans and interest, a 2 percent decline from the end of the second quarter. The remaining $36.66 billion in outstanding assistance is tied the value of investments the government bought from AIG. As those investments pay off or rise in value, the government recoups more money.
18) The spinoffs of AIA and ALICO will help AIG reduce its outstanding assistance from the government by $25 billion. The government is taking preferred stakes in the two units as they are separated from AIG.
19) "Theoretically there's supposed to be enough assets that it can repay the government," said Cathy Seifert, an equity analyst at Standard & Poor's. It still remains to be seen if AIG's operations are worth as much as it owes the government, she added.
20) AIG is relying on improvement at its core insurance subsidiaries to generate profit to repay the government.
21) Net premiums written in AIG's general insurance business, which was rebranded in July as Chartis, rose 2 percent from the previous quarter to $8.08 billion, providing further signs that AIG's core insurance business is stabilizing. Rising claims in the division though weakened its profitability between the second and third quarter.
22) Premiums written in the general insurance business fell 13 percent from the third quarter last year. Life insurance premiums fell 16 percent from the year-ago period.
23) The year-over-year decline can be partly explained by the weak economy, but it does also indicate that customers remain nervous about AIG's long-term health, Seifert said. That concern can further erode the value of the company, which can hurt the price it gets when selling assets, she said.
24) Net income available to common shareholders was $92 million in the three months ended Sept. 30, compared with a loss of $24.47 billion, or $181.02 per share, during the same quarter last year -- the quarter when it was initially bailed out.
25) Including the government's portion of the profit, AIG earned $455 million, or 68 cents per share, during the latest quarter.
26) Adjusted earnings, which excludes the government's stake and realized investment gains and losses totaled $385 million, or $2.85 per share.


Watchdog: Gov ' t overpaid to bail out AIG
(APW_ENG_20091117.0015)
1) Officials managing the multibillion dollar bailout of insurance giant American International Group Inc. bungled the first rescue and may have overpaid other banks to wind down AIG's business relationships, a government watchdog says.
2) The Federal Reserve Bank of New York -- headed at the time by now Treasury Secretary Timothy Geithner -- paid AIG's business partners face value for securities so they would cancel insurance-like contracts AIG had written and ease the firm's liquidity crunch. But at least one of those partner banks would have canceled the contracts for less, according to a report Tuesday from Neil Barofsky, the Special Inspector General for the $700 billion financial bailout Congress approved last October.
3) The report says New York Fed officials mismanaged the negotiations with other banks, removing the threat that AIG would go bankrupt and bowing to a demand from French regulators that French banks holding AIG's debt insurance be paid in full.
4) The initial bailout "was done with almost no independent consideration of the terms of the transaction or the impact that those terms might have on the future of AIG," the report says.
5) As a result, billions more than necessary went to U.S. banks including Goldman Sachs Group Inc.; Merrill Lynch, now part of Bank of America Corp.; and Wachovia, now part of Wells Fargo & Co.; and European banks including Societe Generale, Deutsche Banke, UBS and Calyon, it says.
6) Barofsky also faults the Federal Reserve for refusing at first to reveal which banks had received billions of American taxpayer dollars supposedly intended to save AIG. The Fed released the banks' names and the amount of their payoffs only after lawmakers demanded greater transparency.
7) In its written response, the Treasury Department emphasized that the events "developed extremely quickly" and that officials did not intend to provide further assistance to AIG after an initial $85 billion bailout that the report says tied their hands. But AIG's total bailout package eventually amounted to more than $180 billion.
8) "This report overlooks the central lesson learned from the" AIG rescue, Treasury spokeswoman Meg Reilly said in a statement. "The lesson is that the federal government needs better tools to deal with the impending failure of a large institution" in times of crisis.
9) She said the Obama administration's proposed overhaul of financial regulation would accomplish that goal.


AIG shares fall amid reports of reserve shortfall
(APW_ENG_20091130.1051)
1) Shares of American International Group Inc. tumbled nearly 15 percent Monday after an analyst stirred concerns that the troubled insurer doesn't have enough reserves to pay some potential claims.
2) AIG shares dropped $4.90, or 14.7 percent, to finish at $28.40 -- their lowest close since August 19. The shares have more than quadrupled from a low of $6.60 in March.
3) Sanford Bernstein analyst Todd Bault said AIG is facing an $11 billion shortfall to cover potential claims in its property and casualty insurance business, according to media reports Monday. Bault declined to share the research note.
4) Covering that shortfall could cause problems for the New York-based insurer as it tries to repay a government bailout package it received to help stay in business.
5) Separately, the Financial Times reported AIG may soon get a bid for a part of its aircraft leasing unit from a group that includes the head of that business.
6) A spokeswoman for AIG, which is based in New York, declined to comment on either report.
7) AIG is trying to sell assets and raise capital to help repay the government, which bailed it out last year with a loan package worth more than $180 billion. In return, the government received an 80 percent stake in AIG. As of Sept. 30, AIG owed the government about $85.66 billion in loans as part of the broader bailout package.
8) The Financial Times said AIG could be a step closer to selling a portion of the aircraft leasing business, International Lease Finance Corp., to a group of private investors and the unit's chief executive, Steven Udvar-Hazy. The sale of a piece of ILFC, among AIG's profitable units, could help relieve some of its debt burden.
9) AIG's aircraft leasing unit generated operating income of $365 million during the third quarter, a 19 percent jump from the same quarter a year earlier and a 9 percent increase from the previous quarter.
10) The prospective buyers would acquire about half of ILFC's business, which buys airplanes and then leases them to major airlines, for more than $2 billion, according to the Financial Times.
11) AIG has posted two straight quarters of profits as credit and stock markets improved in recent months. Including the government's portion of the profit, AIG earned $455 million during its most recent quarter.


AIG says general counsel Kelly resigns over pay
(APW_ENG_20091231.0066)
1) American International Group Inc. has lost a top executive due to the government's limits on executive pay.
2) AIG said Wednesday that vice chairman and general counsel Anastasia Kelly has resigned, effective immediately.
3) Kelly left because of the reduction in her base salary that was mandated by the government's pay czar, Kenneth Feinberg, AIG said.
4) Companies like AIG that hold government bailout funds are subject to restrictions including limits on executive pay; in AIG's case, that's the insurer's 100 highest-paid employees. The government has given AIG a bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the New York-based company.
5) AIG also said Suzanne Folsom, chief compliance and regulatory officer, has left to pursue other opportunities. The company did not say if pay was a reason for her departure.
6) Last month, the insurer said it cut the salaries of three top executives, including Chief Financial Officer David Herzog, to comply with the pay restrictions.
7) The insurer, however, has said would go ahead with a previously announced pay package for CEO Robert Benmosche of $7 million. Benmosche, who took over as CEO of the embattled insurer in August, will receive an annual salary of $3 million in cash and $4 million in AIG common stock under the pay agreement.
8) The Wall Street Journal reported on Tuesday that AIG was prepared to give Kelly several millions of dollars in severance pay. The Journal, quoting people familiar with the matter, said the company had determined Kelly was entitled to the money under terms of the AIG severance plan.
9) Kelley joined AIG in September 2006 as general counsel. She was promoted to vice chairman earlier this year.
10) Folsom joined AIG in April 2008.
11) AIG said it has already begun looking for successors for both executives.
12) AIG shares fell a penny to $30.59 in after-hours trading Wednesday after closing at $30.60, down $1.06, or 3.4 percent, from a day earlier.


AIG sells Canadian mortgage insurance unit
(APW_ENG_20100105.0696)
1) The Canadian mortgage insurance business of American International Group Inc. will be sold to a private investor group headed Ontario Teachers' Pension Plan, the groups said Tuesday.
2) Terms of the transaction were not disclosed.
3) AIG's sale of the Canadian mortgage division is the latest business unit to be sold by the insurance giant, which has been selling assets and spinning off divisions in an effort to help repay a government bailout package received last year when it was on the brink of collapse.
4) AIG United Guaranty Mortgage Insurance Company Canada, based in Toronto, is a leading mortgage provider in Canada with assets of about $264 million.
5) Teachers' Private Capital is the private investment department of the Ontario Teachers' Pension Plan, the largest single-profession pension plan in Canada. It is an independent corporation responsible for investing the fund's assets and administering the pensions of Ontario's 284,000 active and retired teachers.
6) AIG, based in New York, was bailed out by the government last fall at the peak of the credit crisis. As losses continued to pile up, the government eventually extended AIG an aid package worth more than $180 billion. The government also received a stake of almost 80 percent in AIG in return for the support.
7) Just last month AIG said it would slash the amount of money it owes the government by $25 billion when it gives the government preferred equity stakes in two of its life insurance companies, American International Assurance Co. and American Life Insurance Co.
8) The companies will be placed into special holding units as AIG decided whether to complete initial public offerings or sell them privately.
9) As of Sept. 30, AIG had tapped $122.31 billion of the aid package and owed the government $85.66 billion in loans. The separation of AIA and Alico would reduce the outstanding aid package to $97.31 billion and the amount owed in loans to $60.66 billion.
10) Shares of AIG fell 8 cents to $29.81 in morning trading in New York.


Bernanke asks for AIG bailout review
(APW_ENG_20100119.1197)
1) Federal Reserve Chairman Ben Bernanke took the unusual step Tuesday of asking Congress' investigative arm to conduct a "full review" of the Fed's role in bailing out insurance giant American International Group.
2) The Fed chief's move is aimed at defusing criticism of the government's $182 billion rescue. The bailout sparked public outrage and demands in Congress for more information, especially after it was revealed that millions in bonuses would go to employees in the AIG division most responsible for the company's need for a bailout.
3) The House Committee on Oversight and Government Reform has a probe under way that seeks to provide a fuller picture of the AIG bailout. Those lawmakers are especially interested in details involving billions in payments AIG made to Goldman Sachs and other Wall Street firms that did business with the insurer. Some lawmakers want to know why those firms were fully paid and why concessions weren't demanded.
4) "To provide a comprehensive response to questions that have been raised by members of Congress, the Federal Reserve would welcome a full review by GAO of all aspects of our involvement" in the AIG bailout," Bernanke wrote in a letter to the Government Accountability Office, the investigative arm of Congress.
5) Bernanke said the Fed already has provided information to Congress on the AIG rescue, has made "a large amount" of information available to the public and provided information to other oversight bodies such as the Special Inspector General for the Trouble Asset Relief Program.
6) Congress passed a law last year giving the GAO authority to review Fed documents in the AIG bailout. The GAO said Bernanke's request will be weighed against other demands on the agency's staff.
7) Besides getting money from the $700 billion taxpayer-funded bailout program overseen by the Treasury Department, AIG also was given a $60 billion line of credit from the Fed. The company has tapped around $22 billion.
8) In the letter, Bernanke said the Fed expects to be "fully repaid" by Sept. 16, 2013 -- five years after the first lifeline was thrown to AIG.
9) Bernanke once again defended the Fed's decision to provide credit to the troubled insurer at the height of the financial crisis in the fall of 2008. AIG's failure -- which would have followed the global shock from Lehman Brothers' collapse -- "would likely have led to a significant intensification of an already severe financial crisis and a further worsening of global economic conditions," Bernanke said.
10) Despite complaints of secrecy about some details of the AIG rescue, Bernanke said it's important to explain to Congress and the public that the Fed and Treasury acted in the "best interests" of the United States and taxpayers in crafting the AIG rescue.
11) The overarching goal, he said, "was to preserve the financial system and to protect households and businesses from potentially calamitous effects on the U.S. economy, while doing everything possible to protect the American taxpayer."


Gen Re paying $92.2M to settle charges
(APW_ENG_20100120.1207)
1) The insurer General Re Corp. has agreed to pay $92.2 million to settle charges by federal authorities' and shareholder claims over its alleged role in accounting misconduct schemes by American International Group and Prudential Financial.
2) The Securities and Exchange Commission and the Justice Department announced the settlements Wednesday with Gen Re, which is part of Berkshire Hathaway Inc., the company led by billionaire investor Warren Buffett.
3) Gen Re, based in Stamford, Connecticut, is paying $19.5 million in a non-prosecution agreement with the Justice Department regarding its criminal probe of Gen Re's transactions with AIG.
4) Under that accord, Gen Re acknowledged that its senior managers engaged in a scheme from 2000-2004 to falsely inflate AIG's reported loss reserves, a key indicator of financial health, the department said. It said the fraud was conducted through the use of two sham insurance transactions between subsidiaries of AIG and General Re in response to analysts' criticism of a $59 million decline in AIG's loss reserves for the third quarter of 2000.
5) The SEC said Gen Re is paying $12.2 million to settle the agency's civil charges over AIG and Prudential. The SEC had said that Gen Re engaged in sham transactions with AIG and Prudential that enabled those companies to "manipulate and falsify" their financial results about 10 years ago.
6) In addition, Gen Re will pay $60.5 million to resolve a class-action lawsuit by AIG shareholders, the SEC said.
7) Insurance conglomerate AIG nearly collapsed in the fall of 2008 at the height of the financial crisis and received about $180 billion in bailout aid from the government. In connection with its accounting scandal, the New York-based company has paid $1.6 billion to settle a range of actions brought by regulators including the SEC, the Justice Department and New York state's attorney general.
8) The scandal at AIG also brought the ouster in 2005 of then-chairman Maurice "Hank" Greenberg.
9) In early 2008, four former executives of Gen Re and AIG's vice president of reinsurance stood trial on charges of conspiracy, securities fraud, making false statements to the SEC and mail fraud stemming from the accounting scandal. They were later found guilty of all charges and sentenced to prison.


AIG discloses details on toxic securities
(APW_ENG_20100129.1414)
1) American International Group Inc. on Friday disclosed details of the toxic securities that helped trigger a massive taxpayer rescue of the giant insurer.
2) In a public filing, AIG listed the securities held in its Maiden Lane III business, which the company and the government created to purchase toxic assets, repay debt and provide capital for some of AIG's operations after its $182.5 billion federal bailout.
3) The Federal Reserve had previously resisted disclosing details on the securities. It argued that doing so could disrupt the market for those assets, possibly making it harder to sell or unwind them.
4) But AIG disclosed the details in a Securities and Exchange Commission filing Friday, two days after Rep. Darrell Issa released the same information to the media as part of a congressional probe into the AIG bailout. Issa is the top Republican on the House Committee on Oversight and Government Reform.
5) AIG didn't immediately returns calls requesting comment.
6) AIG's filing, called a "Schedule A," includes a table listing dozens of collateralized debt obligations, or CDOs, bought from various AIG counterparties including Goldman Sachs Group Inc., Deutsche Bank, Societe Generale, UBS and Merrill Lynch. The filing says the securities were valued at $62.1 billion as of October 2008. By that time, the securities had fallen sharply in value.
7) AIG's Maiden Lane business began buying the CDOs in 2008 in an effort to reduce its exposure to insurance-like contracts, called credit default swaps, written to cover defaults on the CDOs.
8) CDOs are securities backed by pools of mortgages or other assets. They plummeted in value after the credit crisis erupted in 2008 as investors fled all but the safest forms of debt. Credit default swaps are essentially contracts that insure against the default of bonds and corporate debt such as CDOs. Sellers of swaps, such as AIG, are obligated to repay customers if the value of the underlying bonds or debt declines.
9) As Maiden Lane receives cash from the CDOs, the money is first used to repay the government's portion of the loan. Once that is repaid, AIG's funding for Maiden Lane will be repaid. Any additional money made on ownership of the CDOs will be split between the government and AIG, with the government receiving two-thirds of the excess capital and AIG receiving the rest.


Pay czar: AIG bonuses are ' outrageous ' but legal
(APW_ENG_20100203.1337)
1) Bonus payments totaling $100 million to AIG employees from the same unit that prompted a massive taxpayer bailout are "outrageous" but allowed under the law, the Obama administration's pay czar said Wednesday.
2) Kenneth Feinberg said the retention bonuses were contractual obligations agreed upon years ago, before American International Group Inc. received a $180 billion federal rescue at the height of the financial crisis in late 2008.
3) "These are the old grandfathered payments," Feinberg told ABC's "Good Morning America," adding: "I do not for a minute ignore the outrage out there, which I share. But the fact of the matter is we've got to abide by the law."
4) Feinberg said he's working to get back as much of the bonus money as possible. He said AIG employees have agreed to repay 39 million out of $45 million in previous bonuses to the U.S. Treasury.
5) AIG is set to pay the bonuses Wednesday to employees of its financial products division, the unit whose risky bets helped sink the company and trigger the largest corporate bailout in U.S. history.
6) AIG still owes the government $120.7 billion of its bailout.
7) Feinberg said the company should make its last retention bonus payments next month.
8) "Another month or so, these old, guaranteed bonuses will be a thing of the past," he said.
9) In a statement, AIG said current and former employees had agreed to reduce their owed retention payments by $20 million.
10) "We believe this allows us to largely put this matter behind us," the company said.
11) But the Obama administration took a harder line.
12) Treasury Secretary Timothy Geithner said Wednesday that Congress can recoup the AIG bonuses through a new bank fee in President Barack Obama's proposed budget. Geithner called the bonuses an "outrageous failure of policy."
13) Appearing before the House Ways and Means Committee, he asked legislators to support the new fee as a way of getting the money back. The fee, which would be assessed on certain liabilities of the largest firms in the financial sector, would raise about $90 billion over the next decade.
14) New York-based AIG faced intense public and Congressional criticism last March when it paid out hundreds of millions of dollars in retention bonuses to employees months after receiving the government bailout.
15) When the credit crisis hit in the fall of 2008, the U.S. government rescued AIG from the brink of collapse in exchange for an 80 percent stake in the insurer. AIG's near collapse was not due to its traditional insurance operations, but instead risky derivatives contracts written by the financial products division.
16) AIG is in the process of winding down that division, and has said it needs to fairly compensate its employees in order to sell off assets and repay taxpayers in full.


AIG sells Alico unit to MetLife for $15.5 billion
(APW_ENG_20100308.1166)
1) American International Group Inc. said Monday that it will sell its American Life Insurance Co. division for $15.5 billion to MetLife Inc. The government-approved deal, AIG's second big asset sale in two weeks, will give the insurer more cash to repay the billions of bailout dollars it still owes the government.
2) The purchase expands MetLife's presence in Japan and high-growth markets in Europe, the Middle East and Latin America. American Life Insurance, known as Alico, operates in more than 50 countries. MetLife currently offers services in 17 countries.
3) It also moves AIG closer to repaying taxpayers. As of Dec. 31, the company owed the Treasury and the Federal Reserve Bank of New York nearly $130 billion. AIG's bailout package was originally worth up to $182.5 billion.
4) On March 1, AIG agreed to sell Asia-based life insurer, AIA Group, to Britain's Prudential PLC for $35.5 billion. The two units, while selling similar products, don't operate in the same markets in Asia.
5) Investors were pleased with the Alico deal, and bid AIG's shares up 3.6 percent, or $1.02, to $29.10. MetLife shares rose $1.98, or 5.1 percent, to $40.90.
6) MetLife will pay $6.8 billion in cash for Alico. The rest of the purchase price will be paid in stock and what are called equity units, which are eventually convertible to common stock and preferred securities
7) AIG will initially hold an 8 percent stake in MetLife. Its stake will reach 14 percent in early 2011 after some MetLife preferred shares are converted into common shares. The stake could reach up to 20 percent, after the insurer receives $3 billion in equity units.
8) "Rarely does one come across a deal that has such a strong strategic fit," MetLife CEO Robert Henrikson said in an interview with The Associated Press.
9) Henrikson said MetLife has been in the market for various domestic and overseas acquisitions over the past five years. He said he began discussing a possible Alico deal with AIG in December 2008, three months after the government bailout.
10) AIG and MetLife are based in New York. Robert H. Benmosche, the former head of MetLife, became AIG's CEO in August. Benmosche wasn't involved in the deal discussions, Henrikson said. All talks were handled by a special committee within AIG, he said.
11) The Alico deal, while good for MetLife, carries some risk, said Aite Group senior analyst Clark Troy.
12) "Japan is an aging society and MetLife may face challenges growing revenue," Troy said. "However, MetLife does have the ways and means and experience to make the deal work, as they will be building on one of their stronger franchises."
13) MetLife currently has a successful variable annuity business in Japan.
14) MetLife's international business grew significantly in 2005 when the company acquired most of Citigroup's international insurance businesses, adding Japan, Australia and Britain to its portfolio. Before then, MetLife already had operations in South Korea, Chile and in Mexico, where it is the largest life insurer.
15) Henrikson said he didn't consider a purchase of AIA Group because "it didn't fit MetLife's growth plans."
16) As the largest recipient of taxpayer bailout dollars, AIG remains under the supervision of Treasury and the New York Fed. All negotiations around Alico and AIA were monitored actively by representatives from Treasury and the New York Fed, officials from both agencies said.
17) Each agency has participated in every key call and meeting between directors about the deals, and discussed the available options with AIG's executives, according to officials familiar with the process. They spoke on condition of anonymity because they were not authorized to publicly discuss the negotiations.
18) With the latest sale, AIG will be able to slash its outstanding government debt of $129.3 billion by about $51 billion, or 39 percent, to about $78 billion. The cash portion of the Alico and AIA deals will be used immediately to pay down an investment in AIG by the Federal Reserve Bank of New York. The equity portion of the deals will be sold over time to help further repay that debt.
19) The government will also be selling shares it holds in AIG to recoup some of its investment.
20) However, it is not yet clear whether the government will be able to recover all of its investment. It's too early to tell how much the proceeds from any of the stock sales will be.
21) Before it nearly collapsed during the 2008 financial crisis, AIG was the world's largest insurer. It sold a variety of insurance products around the world and operated a lending and aircraft leasing businesses. It also had a financial products division that sold complex securities called credit default swaps. When the financial crisis sent billions of dollars of mortgages and bonds into default, credit default swaps undermined AIG and forced the government to rescue the company. In return, the government took a nearly 80 percent stake in AIG.
22) AIG has been working for the past year and a half to sell assets and streamline operations to repay its debt. Since receiving government bailout funds, AIG has 21 unit sales or asset transactions, including the Alico and AIA deals. AIG's next key sale could be Nan Shan, a Taiwanese company, analysts have said.
23) AIG is also looking at funding needs and exploring options for restructuring its aircraft leasing unit, International Lease Finance Corp., and its consumer and commercial lending business, American General Finance Inc.
24) It is also conceivable that AIG might consider sales of its American General Life and American General Life and Accident units, Aite Group's Troy said.
25) The company is expected to keep Chartis, its larger property and casualty insurance company; two additional Japanese life insurers, and a handful of smaller, U.S.-based companies. They are very unlikely to be sold, according to a Treasury official.
26) Alico has operations either directly or through subsidiaries in Europe, including Britain, Latin America, the Caribbean, the Middle East and Japan. AIA operates primarily in Asia, including China, Singapore, Malaysia, Thailand, Korea, Australia, New Zealand, Vietnam, Indonesia and India.
27) AIA dates back to 1919, when AIG founder Cornelius Vander Starr started his first insurance company, American Asiatic Underwriters in Shanghai. Two years later, he founded Asia Life Insurance Co., which later became Alico.


AIG aircraft unit debt offering has strength
(APW_ENG_20100310.1178)
1) International Lease Finance Corp., the aircraft-leasing unit of American International Group Inc., is looking to raise $1.3 billion in loan offerings as it seeks new funds to help repay some of its debt.
2) The loan sales mark ILFC's first attempt at raising money since AIG received a federal bailout package originally worth up to $182.5 billion in the fall of 2008. ILFC previously took $3.9 billion from AIG to pay back some of its debt.
3) ILFC announced plans for a $750 million debt raise, secured by some of its aircraft and leases, on Feb. 22.
4) The unit is now looking to borrow $1.3 billion by selling a $750 million five-year term loan and a $550 million six-year term loan, AIG spokesman Mark Herr said.
5) The sales are expected to close by month's end.
6) Such a move is a good sign for both ILFC and AIG, analysts said.
7) Investors were "so sensitive on the down side, they have to recognize the external environment is improving," said Bill Bergman, an analyst at Morningstar.
8) A recovery in the credit markets over the past year and a half has made it possible for even bailed-out companies like AIG to tap investors for fresh funds.
9) Century City, Calif.-based ILFC leases its commercial jets, one of the world's largest fleets, to airlines. As of Dec. 31, the company owned 993 jet aircraft. ILFC was thought to be one of the New York-based insurer's jewels. But like many of AIG's business units, it has been up for sale as the insurer struggles to pay back its debt to the U.S. government.
10) Aite Group senior analyst Clark Troy said ILFC is not a core asset for AIG going forward.
11) "(CEO Robert) Benmosche is an insurance guy," Troy said. "Plane leasing is not an insurance line of business."
12) In the last two weeks, AIG has announced two big asset sales that will bring in nearly $51 billion to help pay its debt to the government. As of Dec. 31, AIG owed the Treasury and the Federal Reserve Bank of New York nearly $130 billion.
13) Last month, when AIG announced an $8.87 billion fourth-quarter loss, CEO Robert Benmosche said his company was continuing to address funding needs and explore options for restructuring ILFC.
14) In a recent regulatory filing by IFLC, the company said AIG has plans to support ILFC through Feb. 28, 2011, "to the extent that secured financing, aircraft sales and other sources of funds are not sufficient to meet liquidity needs."
15) AIG shares gained $2.66, or 8 percent, to $35.43 in afternoon trading.


Moshe Greenberg, Bible scholar, dies at 81
(APW_ENG_20100517.0637)
1) Moshe Greenberg, an influential scholar whose work won the first-ever Israel Prize for biblical studies, has died, one of his sons said Monday. He was 81.
2) Greenberg's award-winning Bible scholarship bridged the gap between the commentary of ancient Jewish sages and modern-day religious studies, said Israel Knohl, a professor at Hebrew University of Jerusalem, a colleague of Greenberg.
3) Greenberg died Saturday morning at his Jerusalem home, said his son Rafi Greenberg.
4) His definitive two-volume commentary on the Book of Ezekiel described, among other things, how the prohibition of murder became an unbreakable taboo with the Abrahamic religions because of the rise of a belief in man's connection to God, Knohl said.
5) The Israel Prize is the country's highest civilian award. Prizes are given in several fields on Israel's independence day every year.
6) Born in Philadelphia, Pennsylvania, Greenberg immigrated to Israel in 1970 and became a prominent voice whose work occasionally touched on political topics. He countered those who used the Book of Joshua as a justification for certain forms of violence in defense of Israel, Knohl said.
7) In 1994, along with a colleague, he became the first person to win the Israel Prize for Bible research.
8) He is survived by his wife, Evelyn, and three sons. Rafi Greenberg is an archeologist at Tel Aviv University. Another son, Joel Greenberg, worked for decades as a journalist in Israel for publications including The New York Times and the Chicago Tribune.


Lawyers say no criminal charges in AIG cases
(APW_ENG_20100522.0655)
1) The Justice Department has decided not to file criminal charges against the former head of a division at American International Group Inc. whose dealings in mortgage-related securities nearly bankrupted the insurance giant and led to a controversial government bailout, according to lawyers involved in the cases.
2) The decision appears to bring an end to the criminal investigation of AIG, but a Securities and Exchange Commission probe into AIG and the dealings of its London-based Financial Products subsidiary is continuing and could lead to a civil securities fraud case.
3) Lawyers representing Joseph Cassano, who formerly ran AIG's Financial Products unit, and Andrew Forster, who worked for Cassano, said they were told by federal prosecutors late Friday that no criminal charges would be filed.
4) A person familiar with the government's criminal investigation of AIG confirmed that charges wouldn't be brought. The person was not authorized to speak publicly on the matter and spoke on condition of anonymity.
5) The Justice Department declined comment Saturday.
6) SEC investigators have been involved in the case from the start, but it is unclear when a decision would be made on a civil fraud case.
7) Federal prosecutors were investigating AIG's Financial Products unit, which dealt in financial contracts called credit default swaps that helped sink AIG in September 2008, leading to a taxpayer-funded bailout. The credit default swaps AIG sold were insurance-like guarantees on mortgage securities that wound up forcing AIG to pay out billions of dollars after the housing market went bust.
8) Investigators were looking into whether Financial Products officials tried to deceive investors and AIG's auditors, PricewaterhouseCoopers, by misstating the accounting value of a credit default swap portfolio.
9) When AIG posted a loss for the fourth quarter of 2007, it pinned the blame on an $11 billion writedown related to the credit default swaps held by its Financial Products group.
10) If AIG couldn't make good on its promise to pay off the contracts, many of which were held by major banks, regulators feared the consequences would pose a threat to the whole U.S. financial system. That led the government to go ahead with the $180 billion bailout.
11) Cassano's attorneys, F. Joseph Warin and Jim Walden, said in a statement that the two-year federal investigation was intense and difficult.
12) "The results are wholly appropriate in light of our client's factual innocence," said the statement, which lauded federal agents and prosecutors for following the facts to end the case. "This result was the product of two things: An innocent client and fair prosecutors and agents. The system worked," the statement said.
13) Forster's attorneys, David Brodsky and Richard Owens, said in a statement that they knew it would have been easy for federal prosecutors to win a grand jury indictment, but praised them for listening to their client's case.
14) "We knew the prosecutors were smart, fair and open-minded and that, given a full opportunity to present all the evidence, we could convince them that our client acted at all times in good faith. In the end, the facts were stronger than the emotions surrounding AIG's problems," the statement said.
15) Cassano left AIG in 2008, shortly after the $11 billion loss was reported. Forster is still employed by the company.
16) An AIG spokesman did not return a telephone message left Saturday.
17) The AIG bailout has drawn much public ire, largely because the company paid employees $165 million in retention bonuses after the company nearly failed and had to be bailed out by the government.
18) Nearly two years after a meltdown in the market for subprime mortgage securities cascaded into the worst financial crisis in the U.S. since the 1930s, prosecutors have had little luck bringing criminal cases against top financial executives. Last November two executives at Bear Stearns who ran hedge funds that collapsed after betting on the subprime mortgage market were acquitted of charges that they lied to investors.


Treasury: AIG in better shape to repay bailout
(APW_ENG_20100526.1019)
1) Insurance giant American International Group Inc. is better positioned to pay back all of its $182 billion federal bailout, a key Treasury official plans to testify Wednesday.
2) But AIG's ability to repay taxpayers depends on its future profitability and the insurance industry's strength, Treasury chief restructuring officer Jim Millstein says in his prepared testimony. He says AIG must complete the planned sales of two large insurance subsidiaries and regain the market's confidence.
3) "It will take time to repair full the damage to their franchises, particularly in the United States," Millstein says.
4) AIG received the largest bailout of any company during the financial crisis that crested in September 2008. The company could not meet its financial obligations after selling guarantees on mortgage-related investments that later lost value.
5) Millstein is scheduled to testify before the Congressional Oversight Panel, which is monitoring the $700 billion financial bailout. The panel has criticized officials who managed the bailout for failing to consider alternatives, such as filing for bankruptcy or demanding concessions from AIG's creditors.
6) The panel already heard from a regulator who failed to halt AIG's near-collapse and from officials who managed the rescue for the Federal Reserve Bank of New York.
7) AIG CEO Robert Benmosche also is scheduled to testify. He says in prepared testimony that AIG is less reliant on government aid because it has been able to raise money from private investors in recent months.


Treasury sees options available for AIG repayments
(APW_ENG_20100602.1180)
1) Treasury Secretary Timothy Geithner on Wednesday looked past the collapse of an American International Group deal to sell off a subsidiary, saying the insurance giant has other options for paying back its $182 billion government bailout.
2) Geithner addressed the issue after Prudential PLC, a British company, said it was backing out of a deal to buy American International Assurance. The deal faltered after Prudential shareholders balked at the $35.5 billion price. AIG refused to accept less money.
3) Private analysts question whether AIG did the right thing in refusing to cut its asking price. Some say they wonder whether the taxpayers will ultimately be repaid.
4) But Geithner praised the company's decision to walk away from the Prudential offer.
5) "AIG is now free to pursue a bunch of other options to help maximize the return, reduce any risk of loss to the taxpayer," Geithner told reporters at the Treasury Department.
6) "They have got a very strong management team, a much stronger board in place, making incredibly impressive progress frankly in restructuring that entity ... putting us in a position that we can maximize the return to taxpayers as a whole," he said.
7) Geithner did not address how much taxpayers may ultimately recoup in the $182 billion bailout, the largest of the government rescues. The Congressional Budget Office in March estimated that the bailout will cost taxpayers $36 billion.
8) Others outside the government do not share Geithner's optimism.
9) "It's difficult to say whether this means good things or bad things for taxpayers," said Bill Bergman, a senior analyst at Morningstar in Chicago. "It is still uncertain how much taxpayers will get repaid."
10) AIG refused to comment on the collapsed deal other than to release a letter that Robert Benmosche, AIG president and CEO sent to company employees. It said "AIG is in the best shape it's been in two years."
11) Benmoche said that the company will have "several options to consider regarding AIA -- more than we did in March."
12) Many private analysts believe that AIG will return to a previous effort to sell the unit in an initial public offering. AIG last year said it was considering an offering of AIA through the Hong Kong stock exchange, prior to negotiating a deal with Prudential
13) Sachin Shah, a special situations and merger arbitrage strategist at Capstone Global Markets, said a company typically would sell a 15 percent to 20 percent stake of a subsidiary through an IPO. Shah said it would then sell off future pieces of the company in blocks to larger investors or through secondary stock offerings over time.
14) On Tuesday, AIG rejected Prudential's revised offer of $30.38 billion.
15) Shah said it was possible that the government supported AIG's decision to balk at the reduced price because of its potential impact on future sales.
16) "You don't want to send a bad message" to potential future buyers that you are willing to take distressed sale prices, Shah said.
17) Cathy Seifert, an equity analyst at Standard & Poor's in New York, said that AIG basically has three options -- try to find another big buyer for all of AIA, raise money through an IPO or break up AIA for sale to other companies.
18) She said the least likely option may be finding a buyer as large as Prudential.
19) "That would be like selling a real high-end home in a difficult real estate market. The pool of available buyers is not that large," she said.
20) As of March 31, AIG's outstanding government aid balance totaled $134.21 billion.
21) Of that package, AIG must repay the government $101.61 billion in loans. The remaining $32.61 billion is tied to the value of assets the government took over as part of the bailout. As those risky investments are repaid, that money goes directly back to the government.
22) The proceeds from the AIA sale would have been used to directly reduce the amount of assistance AIG received from the government. It would have cut down AIG's government aid package by more than 25 percent and would have been by far the largest repayment the insurer made since getting the initial bailout in 2008.
23) AIG still plans to use about $15.5 billion it expects to receive from the sale of its American Life Insurance Co. division to MetLife Inc. to repay the government loan.


AIG agrees to pay $725M to investors in settlement
(APW_ENG_20100716.1122)
1) American International Group Inc. and some of its directors and officers have agreed to a $725 million settlement to resolve allegations of wide-ranging fraud laid out in a class action suit led by three Ohio pension funds.
2) Ohio Attorney General Richard Cordray said Friday the latest figure will combine with previous AIG settlements reached with secondary defendants to pay about $1 billion to shareholders, including pensions representing firefighters, police, teachers, librarians and others. He characterized it as the 10th largest securities litigation settlement in U.S. history.
3) The lawsuit alleged anti-competitive market division, accounting violations, and stock price manipulation by AIG between October 1999 and April 2005.
4) "The serious misconduct by AIG more than deserves today's large settlement," Cordray said.
5) AIG said in a statement it was glad to have the matter resolved.
6) "This settlement ends a long-standing lawsuit, allowing AIG to continue to focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders," it said.
7) The federal government bailed out New York-based AIG in September 2008 as the financial crisis spiraled out of control. The insurer has received aid packages with a total value of $182.5 billion from the government. In return for that financial support, the government received an 80 percent stake in AIG.
8) Cordray's office represented the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and the Ohio Police and Fire Pension Fund, who were lead plaintiffs in the lawsuit.
9) The settlement still requires court approval, after which an initial payment will be made of $175 million, Cordray said. AIG will fund the remaining $550 million through one or more offerings of common stock.
10) If the necessary amount can't be raised, plaintiffs will have three options: terminate the agreement, acquire shares of AIG stock worth $550 million, or grant an extension, he said.
11) The suit alleged that AIG:
12) --Committed accounting fraud that culminated in a $3.9 billion restatement in May 2005 that included an array of transactions through which the company artificially boosted its reported claims reserves. Those transactions included allegations relating to a $500 million no-risk fraudulent reinsurance transaction with General Reinsurance Corp. in relation to which one AIG executive and four General Reinsurance executives were found guilty of securities fraud.
13) --Divided the market for certain types of insurance by paying tens of millions of dollars in undisclosed contingent commissions to insurance brokers and through bid-rigging.
14) --Engaged in stock price manipulation that Cordray called "straightforward," in which AIG executives ordered traders to inflate the company's stock price.
15) In addition to the $725 million announced Friday, the case against AIG also includes several earlier settlements: $72 million with General Reinsurance; $97.5 million with PricewaterhouseCoopers LLP, and $115 million with former AIG chairman Hank Greenberg and other AIG executives and related corporate entities.


AIG posts 2Q loss of $538M on restructuring costs
(APW_ENG_20100806.0420)
1) The insurance giant AIG is reporting a $538 million loss in the second quarter due to charges related to selling assets to repay the federal government bailout.
2) AIG, which was rescued by the government during the financial meltdown, said Friday its net loss attributable to common shareholders amounted to $3.96 per share. It had a profit of $311 million, or $2.30 per share, a year ago.
3) The net loss attributable to AIG was a larger $2.66 billion. That is much bigger than the $538 million loss attributed to its shareholders because it includes the portion that the government is shouldering. The government owns 80 percent of AIG.
4) Removing the charges, AIG's profit is $1.99 per share. Wall Street expected 99 cents per share.
5) AIG shares soared $2.10, or 5.3 percent, to $42 in pre-market trading.


AIG repaying nearly $4 billion in federal loans
(APW_ENG_20100823.0469)
1) In its single biggest repayment of bailout loans so far, American International Group Inc. said Monday it is paying back nearly $4 billion in taxpayer aid with proceeds from a recent debt sale.
2) The insurer's aircraft leasing company, International Lease Finance Corp., completed the sale of $4.4 billion in debt. AIG will use more than $3.9 billion of the proceeds to repay the Federal Reserve Bank of New York, trimming the balance on its credit line with the Fed to about $15 billion. Adding interest, the total is about $21 billion.
3) The emergency credit line was part of a $182 billion federal bailout package that New York-based AIG received during the financial crisis to avoid collapse. AIG has been selling off assets to pay back the aid.
4) "This is continuing tangible evidence of AIG's progress in repaying the American taxpayers," said Robert Benmosche, AIG President and CEO. "AIG is getting stronger every day. We still have more work to do, but we will finish the job and make sure we repay the American taxpayers."
5) As of June 30, excluding the new payment, AIG said its outstanding balance owed to the government stood at about $101 billion. The total includes debt as well as preferred shares of stock in AIG held by the Treasury Department.
6) Los Angeles-based ILFC leases one of the world's biggest commercial jet fleets. It struggled earlier this year to pay off its loans, and had to draw the $3.9 billion from AIG to pay back some of its debt. AIG had tried to find a buyer for the unit, but any sale seems off the table for now as ILFC has found healthy demand for recent bond offerings which will help it meet some deadlines for paying back loans.
7) The repayment will release about $10 billion of collateral that ILFC had pledged to the Fed under the credit agreement. With the recent debt sales and other notes issues, the aircraft unit has boosted its total liquidity -- assets that can quickly be converted to cash -- to more than $12.5 billion over the last five months.
8) The offerings "are a direct reflection of our company's viability and future prospects as a leader in leasing aircraft to the world's airlines," said Henri Courpron, ILFC's CEO. He noted that the company has more than $13 billion in aircraft orders.
9) Separately, AIG said it will book a pretax charge of about $650 million against its earnings due to the repayment.
10) In morning trading, shares of AIG rose 52 cents to $35.69. The stock has traded in a 52-week range of $21.54 to $55.90.
11) In June, the Congressional Oversight Panel said in a report that it was still unclear whether U.S. taxpayers will ever fully recoup the full $182 billion they plowed into AIG.
12) Regulators feared AIG's collapse would pose a threat to the whole U.S. financial system, in part because of AIG's dealings in financial contracts called credit default swaps. The swaps that AIG sold were insurance-like guarantees on mortgage securities that wound up forcing AIG to pay out billions of dollars after the housing market went bust.
13) Earlier this month, AIG reported a $538 million second-quarter loss due to charges related to selling assets to repay the bailout money. Among the charges were $3.42 billion related to the sales of AIG's American Life Insurance Co. unit, or Alico, and its Nan Shan Life Insurance Co.


Report: AIG, government discuss bailout repayment
(APW_ENG_20100914.0434)
1) Insurance giant American International Group Inc. is discussing plans with the government to fully repay the government bailout it received two years ago, according to a report in the Wall Street Journal.
2) AIG was one of the hardest hit financial companies by the credit crisis and received multiple bailout packages from the government beginning in September 2008. AIG's outstanding balance of assistance from the government totaled $132.1 billion as of June 30. Of that balance, AIG must repay $101.2 billion; the rest is tied to the value of investments the government took over.
3) Under the plan being discussed with government officials, AIG would begin to fully repay the bailout as early as the first half of next year, according to the Wall Street Journal report, which cited unnamed people familiar with the matter.
4) The plan would begin with the Treasury Department converting $49 billion in preferred stock it holds in AIG into common shares, according to the report. The Treasury Department would then start selling those shares to investors. It would be able to pocket a profit if AIG's share price rises.
5) That move is similar to the deal the government struck with Citigroup Inc., which was another of the largest bailout recipients. Citigroup paid off a large chunk of the bailout money it received in cash, but also converted $25 billion it owed the government into common stock. The government has been selling those shares throughout this year at a profit.
6) For AIG, converting the preferred shares into common stock would increase the government's stake in the New York insurer to more than 90 percent from the nearly 80 percent it currently owns. The government received the nearly 80 percent stake in AIG as part of the initial bailout package.
7) AIG spokesman Mark Herr said, "Our objectives remain the same: to repay taxpayers and position AIG over time as a strong, independent company worthy of investor confidence."
8) He declined to comment specifically on any potential talks with the government.
9) AIG has been selling assets over the past two years since it received its first bailout, in an effort to streamline operations and repay the government debt. The company has been selling noncore assets like many of its foreign life insurance subsidiaries.
10) AIG made its largest one-time repayment of debt last month. It repaid $4 billion after its aircraft leasing unit successfully raised $4.4 billion in debt.
11) AIG remains on schedule to close the sale of its American Life Insurance Co. unit by the end of the year. It plans to use $16.5 billion from that sale to repay government debt as well.
12) AIG has focused on trying to return to consistently profitability in its primary businesses it plans to hold, such as its global property and casualty and U.S. life insurance operations.
13) AIG shares fell 49 cents to $36.43 in pre-opening trading.


AIG reaches deal to repay government
(APW_ENG_20100930.0474)
1) AIG, which became a lightning rod for criticism over government bailouts, said it reached a deal to repay billions of dollars it received during the credit crisis.
2) The plan announced Thursday could return a profit to taxpayers who footed the bill for AIG's near collapse in September 2008.
3) "This is a pivotal milestone as we deliver on our long-standing promise to repay taxpayers," Robert Benmosche, AIG's CEO said in a statement. "We are very pleased that this agreement vastly simplifies current government support of AIG."
4) The announcement provides a clearer strategy to repay AIG's debt to the government. Until this point, AIG was primarily repaying the government as it took in money from asset sales, but there was no timeline for repayment.
5) New York-based American International Group Inc. was one of the hardest hit financial companies by the credit crisis and received the largest bailout the government doled out. It received a bailout package worth as much as $180 billion from the government, which received an 80 percent stake in the company in return.
6) The insurance giant was not undone by its traditional business, but instead for dealing in the complex derivatives and securities market that got so many financial companies into trouble.
7) AIG also received considerable criticism because it continued to pay out bonuses to employees after it received the bailout, including employees who worked in the division that nearly destroyed the company.
8) The government stepped in to rescue AIG because the insurer worked with hundreds of financial institutions throughout the world. The government believed at the time that a collapse of AIG would further hurt the already fragile credit markets, which had been shaken by the bankruptcy of Lehman Brothers.
9) As part of AIG's exit plan, the U.S. Treasury Department will swap preferred shares it currently holds in AIG for common stock and then sell those shares over time. AIG will also repay loans it received from the Federal Reserve Bank of New York as part of the deal.
10) As of June 30, AIG still had $132.1 billion in outstanding aid from the government, including $49.1 billion in loans from the Treasury Department. The new shares will give the Treasury a 92.1 percent stake in AIG before it begins selling shares.
11) In Washington, Treasury Secretary Timothy Geithner praised the agreement that was reached.
12) "The exit strategy announced today dramatically accelerates the timeline for AIG's repayment and puts taxpayers in a considerably stronger position to recoup our investment in the company," Geithner said in a statement.
13) The government will receive about 1.66 billion shares of AIG common stock in exchange for the $49.1 billion in preferred shares it holds in AIG. Those preferred shares were issued through the government's Troubled Asset Relief Program, which was launched to provide $700 billion to financial companies during the credit crisis.
14) The conversion price of the government's shares is equal to about $29.67 a share.
15) AIG shares rose 80 cents, or 2.1 percent, to $38.25 in pre-opening trading. So if the government is able to sell shares at the current trading price, it will make $13.2 billion in profit.
16) The government could still lose money elsewhere. As part of the bailout, the government took over some of AIG's risky investments, and is exposed to potential losses related to them.
17) To alleviate concerns about the government flooding the market with new shares of AIG, the insurer will issue 75 million warrants to current common shareholders that will allow them to buy new stock for $45 per share.
18) AIG owes the Federal Reserve Bank of New York about $20 billion. It plans to repay that debt, in part, through earnings it generates and the sale of some its subsidiaries. AIG has been selling some of its units since it received the initial bailout in September 2008. It is in the process of selling American Life Insurance Co. to MetLife Inc. and spinning off American International Assurance Co. into a new company. Those two moves will help cover a large portion of the money AIG owes the Federal Reserve bank of New York.
19) AIG said in a separate statement Thursday that it reached a deal to sell two Japanese life insurance units to Prudential Financial Inc. for about $4.2 billion in cash. That money will also going toward repaying the government bailout.


AIG bailout exit doesn ' t resolve losses from TARP
(APW_ENG_20101001.0064)
1) American International Group finally has a plan to exit the biggest of the Wall Street bailouts a month before midterm elections. But much as embattled lawmakers might wish otherwise, the book on TARP won't close anytime soon.
2) There's no guarantee taxpayers who gave AIG a $182 billion bailout will be made whole under the plan the company announced Thursday. Under the deal, Treasury will swap its majority stake in AIG for common stock and then sell those shares over time.
3) The government loses its authority to tap Troubled Asset Relief Program funds on Sunday. Democrats facing tough re-elections hope voters will see the bailouts as nearing an end.
4) That will be a tough case to make. Close to $190 billion in TARP money has not been paid back. The Congressional Budget Office's most recent estimate said taxpayers will never get back about $66 billion of it, although estimates of the final cost have been dropping steadily.
5) The public remains angry about the bailouts, which were launched in President George W. Bush's final months. Americans have been particularly furious over the outsize bonuses that bailed-out firms paid to executives. The anger may dissipate as the economy improves, but it will linger until most sitting lawmakers are out of office, said Norman Ornstein, resident scholar at the conservative American Enterprise Institute.
6) "Finding a way to reduce the anger, much of it misplaced, over what TARP did, is a pretty strong political goal" for the Democrats, he said. It will be an uphill battle, Ornstein said.
7) TARP, which Obama administration officials say helped stabilize the financial system, has been targeted by the tea party movement as a wasteful giveaway that rescued Wall Street while ordinary Americans suffered the effects of the Great Recession. Democratic and Republican lawmakers who voted for the bailout have had to defend their votes.
8) The deal will give Treasury a 92.1 percent stake in AIG before it begins selling its shares. But it can't be completed until AIG proves its strength by displaying its ability to raise money from private investors and regain a top rating from credit agencies.
9) Otherwise, "this deal won't go through," CEO Robert Benmosche said in an interview Thursday. "The Treasury wants to assure itself it's investing in a company with the strength to be competitive in the marketplace."
10) Benmosche said he expects the transaction to take place in the first quarter of 2011. S&P credit analyst Kevin Ahern said AIG's rating will likely be upgraded in a month's time, after it sells off a life insurance subsidiary and spins off another in an initial public offering.
11) Before the stock swap, AIG will repay about $20 billion in loans it received from the Federal Reserve Bank of New York. AIG plans to repay that debt in part through earnings it generates and the sale of some its subsidiaries. AIG has been selling some of its units since it received the initial bailout in September 2008.
12) CEO Benmosche said he would have preferred to put off an exit agreement until November, after the completion of some sales. But he said he wanted to make sure that as TARP expired, AIG wasn't again thrust into the spotlight as a "ward of the state."
13) Treasury Secretary Timothy Geithner praised the agreement. He said it "puts taxpayers in a considerably stronger position to recoup our investment in the company."
14) The government will receive about 1.66 billion shares of AIG common stock in exchange for its $49.1 billion investment. The shares would be worth about $29.67 apiece. In trading Thursday, shares rose $1.65, or 4.4 percent, to $39.10. So if the government is able to sell shares at their current price, it would make $15.8 billion in profit on that part of its stake.
15) Part of the government AIG's $182 billion bailout went unused. The rest is expected to be recovered from the sale of assets.
16) Treasury's work on the bailouts is hardly finished. As of Aug. 31, Treasury had tapped $460 billion from TARP for banks, auto makers and mortgage companies. Of that, $386 billion was disbursed, and $187 billion had not been repaid. AIG and automakers GM and Chrysler held the bulk of that money.
17) The government is in the process of selling back shares of Citigroup Inc., which received $45 billion in taxpayer support in one of the largest bank rescues by the government. The government said Thursday it raised $2.25 billion from the sale of trust-preferred shares, and has raised $16.4 billion so far from the sale of Citigroup common stock. The bank repaid another $20 billion in December 2009.
18) The government's remaining shares of common stock have a value of $14 billion at Thursday's closing stock market price.
19) AIG was one of the financial companies hit hardest by the credit crisis and received the largest bailout the government doled out. The insurance giant was not undone by its traditional business. Rather, it was felled by its dealings in complex derivatives.
20) AIG also drew criticism for continuing to pay out bonuses to employees after it received the bailout. Some of those employees worked in the division that nearly destroyed the company.
21) The government stepped in to rescue AIG because the insurer worked with hundreds of financial institutions throughout the world. The government believed at the time that a collapse of AIG would further hurt the already fragile credit markets, which had been shaken by the bankruptcy of Lehman Brothers.


Report: AIG to sell India mutual fund business
(APW_ENG_20101004.0494)
1) American International Group Inc. is in talks to sell its mutual fund business in India for around $10 million, India's Mint newspaper reported Monday, as the troubled U.S. insurer struggles repay its $182 billion U.S. government bailout.
2) AIG is in talks with at least four asset management companies to sell its AIG Global Investment Group Mutual Fund for 4 percent to 5 percent of the value of its assets under management, which total 10.2 billion rupees ($230 million), Mint reported citing three unnamed sources with knowledge of the deal.
3) AIG has been selling off subsidiaries as it finalizes plans to exit its government bailout before U.S. midterm elections.
4) The company said last week it will sell its two Japanese life insurance units to Prudential Financial Inc. for about $4.2 billion in cash.
5) It is also planning to spin off its Asia life insurance unit in an initial public offering on the Hong Kong Stock Exchange.
6) The Wall Street Journal reported Monday that the planned IPO of the Asian unit, called AIA Group Ltd., could value the unit at up to $30.5 billion.
7) Citing an unidentified person familiar with the deal, the newspaper said AIG is planning to float about half of its Asian insurer. The newspaper said the $30.5 billion valuation represents the top end of a price range for the offering which it said is expected to be announced Tuesday.
8) AIG was one of the financial companies hardest hit by the economic meltdown and got the government's largest bailout package. The government received an 80 percent stake in the company in return.


Insurance giant AIG posts $2.4B loss for 3Q
(APW_ENG_20101105.0463)
1) Insurance giant AIG is reporting a $2.4 billion loss for the third quarter, dragged down by hefty charges tied to selling off some assets.
2) But American International Group Inc., which is 80 percent-owned by the U.S. government, remains confident in its core operations, which include its property and casualty and life and retirement services business.
3) "AIG's continuing insurance operating results remain solid," President and CEO Robert H. Benmosche said in a statement. "Despite soft market conditions in the property casualty market and a low interest rate environment, these businesses have demonstrated their market leadership and are maintaining their discipline."
4) New York-based AIG is in the process of repaying more than $100 billion still outstanding from a government bailout it received two years ago during the credit crisis. It is selling off assets to help repay taxpayers.
5) AIG was one of the hardest hit financial companies by the credit crisis. Its bailout package enabled it to tap as much as $180 billion in aid.
6) AIG lost $2.4 billion, or $17.62 per share, in the third quarter, compared with earnings of $92 million, or 68 cents per share, a year ago.
7) Restructuring-related charges amounted to $4.5 billion, mostly tied to the assets sales. The pending sale of AIG's 80 percent stake in consumer credit business American General Finance Inc. weighed heavily on the quarter, as AIG incurred a $1.9 loss related to the transaction.
8) American General Finance provides loans, retail financing and other credit-related products to consumers in the U.S., Puerto Rico, the Virgin Islands, and the U.K. AIG agreed in August to sell it to hedge fund manager Fortress Investment Group LLC for $125 million.
9) AIG also recorded a $1.3 billion goodwill impairment charge related to its pending sale of AIG Star Life Insurance Co. Ltd. and AIG Edison Life Insurance Co.
10) Removing the charges, AIG lost $1.47 per share.
11) The insurance company said the charges were somewhat offset by a $1.4 billion tax benefit.
12) Revenue for the three months ended Sept. 30 dipped 3 percent to $19.09 billion from $19.6 billion, the New York-based company said Friday.
13) Net written premiums climbed 7 percent to $8.6 billion from $8.07 billion, a sign of some stabilization. AIG quickly lost customers after its bailout because of uncertainty over its survival.
14) AIG announced in late September definitive plans about how it would repay the government bailout.
15) Earlier this week, the company said it raised nearly $37 billion through the initial public offering of its Asian insurance business AIA Group Ltd. and the sale of American Life Insurance Co. That money will go directly to repaying the government.
16) Most of the rest of the outstanding debt AIG owes will be converted to common stock by the end of the first quarter in 2011. That will give the government a 92.1 percent stake in the company. The government will then start selling those shares to private investors to recoup its money, similar to what it is currently doing with Citigroup Inc. shares.
17) Based on current prices, the government would make a big profit on AIG shares it will receive in the coming months. But if AIG cannot prove to be consistently profitable, its stock price could go down and hurt the government's ability to unload the shares.


AIG cleans house; posts $2.4B loss for 3Q
(APW_ENG_20101105.0875)
1) American International Group Inc., one of the largest recipients of government aid during the financial crisis, reported a $2.4 billion loss due to restructuring charges Friday as the sprawling insurance company made more strides toward trimming down its balance sheet and returning taxpayer-funded bailout money.
2) The moves by New York-based AIG, which is still 80 percent owned by the government, will likely result in an upgrade to the company's credit ratings, setting the stage for the government to take the steps necessary to start selling its stake.
3) AIG still owes about $100 billion from the bailout package it received two years ago at the peak of the 2008 credit crisis, shortly after the collapse of the Lehman Brothers investment bank. One of the first portions that AIG plans to repay is a $20 billion credit facility extended by the Federal Reserve which carries a hefty fee.
4) "In the fourth quarter, we want to exit the Federal Reserve debt," said Robert Benmosche, CEO of AIG, in an interview with The Associated Press. Benmosche expects the company will likely take another charge in the fourth quarter of $4.7 billion related to repaying the Fed.
5) AIG was one of the hardest-hit financial companies by the credit crisis, and its bailout package enabled it to tap as much as $180 billion in aid. AIG's massive losses stemmed not from its traditional insurance businesses but from exotic financial instruments based on mortgage securities, which caused the company to incur huge deficits as the housing market crumbled. Regulators feared that if AIG collapsed it could send even worse shock waves through the financial system because of how deeply intertwined AIG's dealings were with major banks.
6) The company has been selling off assets in order to raise funds to repay the government. It recently raised $36.7 billion by selling and spinning off two life insurance divisions, and it also entered agreements to sell three other business units. The company's third-quarter results included restructuring-related charges amounting to $4.5 billion, mostly tied to the assets sales.
7) The latest moves by AIG position the company to get a boost to its credit ratings within the next two weeks. In a previous ratings report, S&P had said that AIG's current credit rating of BB, which is considered "junk," or below investment-grade, will likely rise to BBB, which is investment grade. That would allow a much wider group of portfolio managers to own AIG's debt.
8) "These are critical milestones," said Kevin Ahern, credit analyst at Standard & Poor's, who is part of the team that reviews AIG's rating. "We view those transactions as significant and we're likely to move upward on AIG's rating."
9) Ahern said he was also heartened that the results from AIG's core operations were slowly showing signs of strength. In the third quarter, AIG's operating income from its insurance business was $2.05 billion, up from $1.92 billion in the same period last year.
10) The U.S. Treasury said earlier this week that it will own 92.1 percent of AIG when it coverts its $49 billion preferred shares into 1.66 billion shares of common stock after AIG's restructuring process is completed. Based on AIG's current stock price, those shares are worth about $74 billion, which could give the Treasury a gain of $25 billion, if the shares manage to hold on to their current levels.
11) AIG's shares edged up 16 cents to $44.91 Friday.
12) In the third quarter, AIG lost $2.4 billion, or $17.62 per share, compared with earnings of $92 million, or 68 cents per share, a year ago.
13) The pending sale of AIG's 80 percent stake in consumer credit business American General Finance Inc. weighed heavily on the quarter, as AIG incurred a $1.9 billion loss related to the transaction.


AIG takes key step to pay off largest bailout
(APW_ENG_20101208.0880)
1) Insurance conglomerate American International Group Inc. is taking a key step toward paying off a bailout that was at one point worth $182 billion -- the largest of the financial crisis.
2) The company says in a public filing Wednesday that it will repay a loan from the Federal Reserve Bank of New York. AIG says that will clear the way for the Treasury to sell off the government's stake. Treasury's stake in AIG will temporarily rise from roughly 80 percent to 92 percent, as part of the deal.
3) During the height of the crisis, the New York Fed provided as much as $91 billion in credit to AIG. As of early December, AIG owed about $21 billion.
4) Treasury officials would not comment on the government's planned sales of AIG shares. They said the shares will be sold to maximize taxpayer profits and minimize the risk of loss.
5) "Today's announcement is a milestone in the government's long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers," Treasury Acting Assistant Secretary for Financial Stability Tim Massad said in a statement. "When all is said and done, we believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit."
6) AIG became a symbol for excess risk on Wall Street during the crisis that peaked in late 2008. The company sold insurance-like protection against losses on mortgage bonds and other risky investments. When the value of those investments dropped, AIG could not afford to cover the losses.
7) For months, the government expected to take massive losses on its investments in AIG. The nonpartisan Congressional Budget Office said last month that the rescue will cost taxpayers $14 billion.
8) Wednesday's filing moves the government closer to what Treasury officials expect will be a multibillion dollar profit.
9) AIG and Treasury first described the plan in September. Wednesday's filing marks the official signing of the deal by AIG, the New York Fed and Treasury.
10) The filing "marks an important step forward in our progress toward completely repaying taxpayers. We remain committed to executing the steps and meeting all conditions in the agreement as soon as possible," AIG said in a statement.
11) Treasury will convert its stake into about 1.66 billion shares, worth $70.09 billion, based on Wednesday's closing price. When the shares are sold, the proceeds will pay off Treasury's current $47.5 billion investment in AIG, plus another $22 billion that AIG will borrow to settle its obligations to the New York Fed.
12) The deal can't be completed until AIG proves its strength by raising money from private investors and regaining a top rating from credit agencies.
13) "We hope to be able to go to the market with a public offering of AIG this spring, but we have work to do to make that happen," AIG said in a statement. "We are working as diligently as we can to achieve this as quickly as possible, subject to market conditions."
14) Trading of AIG shares was halted Wednesday afternoon as news of the deal spread. AIG shares plummeted Wednesday by $1.73, or 4 percent, to $42.22 before trading was halted.
15) Once the deal is complete, AIG shareholders will receive warrants to purchase up to 75 million shares of AIG stock in 10 years at a price of $45.00 per share. Warrants are contracts that allow the holder to purchase stock for a set price on some future date.
16) Treasury also still holds warrants to purchase more AIG shares in the future.