AIG Posts Record Q4 Loss, Gets Extra $30bn Bailout
Troubled US insurer AIG has reported a $62bn loss for the fourth quarter of 2008 - the largest such loss in corporate history.
The insurance giant, one of the highest profile casualties of the credit crunch, revealed that it had amassed a $US61.7 billion loss in the fourth quarter.
The staggering deficit, equal to $US22.95 a share, is the group's fifth consecutive quarterly loss. Its total loss in the period is in excess of $US100 billion.
The news confirms leaked Q4 figures last week.
The insurance giant will also receive an extra $30bn from the US government as part of a rescue package. It has already received $150bn from the government - the biggest bailout of any American company.
Stock markets slid sharply after the news emerged. The Dow fell below 7,000 for the first time since 1997.
You may wonder whether it might not be cheaper or less painful for AIG to be allowed to fail, however the US Government is concerned that would spark even more widespread economic problems.
“AIG by itself is not important, but it is intertwined in so many other aspects of our financial life and so many people rely on it in one form or another,” says Stan Collender, a partner at Qorvis Communications in Washington. “If AIG were allowed to go down, it could lead to possibly a global depression.”
AIG provides insurance to 100,000 entities, including small businesses, municipalities, 401(k) plans, and Fortune 500 companies, which employ more than 100 million Americans, notes a joint statement Monday from the US Treasury and the Federal Reserve about the complex financial transactions involving the company. In addition, AIG has 30 million policyholders and provides retirement insurance for hundreds of thousands of teachers and nonprofit organizations.