Wonderful news, the smoke and mirrors brigade has come full circle. Original pledge of 100% collateral for initial bail out funds of some $ 50 billion with Government ownership of 79.9% grew eventually to $ 182,5 billion on the same collateral with the Government still owning 79.9%. The sale of AIA if it actually occurs might bring in some $ 35 billion, the two other smaller non-life insurers may bring in $4 billion odd, and now we have the Government converting into 1.66 billion shares of preferred stock as well as issuing 75 million warrants at a strike price of $ 45.
Lest we forget, obviously the Government has, but unlikely the shareholders, that current trading of this worthless stock on the exchange needs to be divided by 20 for it’s physical real value of some $ 2 per share. The Government warrants are physically worthless; and the value of the 1.66 billion common shares needs to be divided by 20 for what would be an accurate description of true market value.
The American taxpayer has been taken to the cleaners, and the Government will crow over their ill gotten so called fortune, but those of us, who have spend their lives in the business of insurance, not the insurance business know otherwise, don’t we!
You could sell the entire group and never repay the full value of debt. This was a travesty from day one which never should have occurred, under the aegis of crying wolf, the earth would not have stood still and the economy of the world would have continued, albeit, a bit poorer, but perhaps wiser?
Excuse the second comment, but lest we all not forget that they have not paid one cent in seven quarters of the 10% interest in dividends that were due on the initial bail out funding deal. How about starting with that little pay back, which appears to be simply and conveniently forgotten.
In the interest of sticking with fact, i beg to debate you Peter Polstein. You are acting like a clown/politician with your grandstand stmts that are not based in fact. I already responded to your prior lame comments from yesterday’s IJ AIG story with a long dissertation of how far off you are from understanding the real nature of this AIG/FRBNY/Treasury deal. Without reminding you of all the details again, how about this one piece taken from GAAP certified 2nd qtr 10Q from AIG in late June showing consistent and open payments of interest being realized in Net Income financials each qtr. (that means paid and lowering AIG’s net income results). You can go into any 10Q of AIG’s over the last 7 quarters and get this yourself for factual proof.
quote:
“Interest expense on the FRBNY Credit Facility was $755 million in the second quarter of 2010, compared to $1.4 billion in the second quarter of 2009, due largely to the reduction in
the balance when the preferred interests in the AIA and ALICO SPVs were issued.” Then read the Net Income stmt details.
This is nothing but another feeble attempt at the classic “shell game”. The IPO “announcement” did not work so we have another plan. This time the Government will buy even more of AIG??!!?? In December 2000 AIG had a market cap of $242B; today the market cap is $24B, or less than 10% of what it once was. Furthermore, only $5B of the curent market cap is held by private investors; the rest is “owned” by US(A). In 2000 AIG was rated A++ and had little or no debt. Today there is a toal debt of $124B; absent the government backing the rating would be lucky to make B (meaning MUCH higher cost of working capital). The numbers quoted in this story do not add up!!! Much of the profitable parts of AIG have been (or will be) sold. The once powerful P&C business is gutted. Most of the key tallent has left (me included). Lastly, thinking that private investors will buy back the government AIG stock is a pipedream. I lost a sizeable amount of money on my AIG stock as did many true investors. Those holding the stock today are short term investors at best. If I wanted to make a long term investment in a long tem profitable insurance company, I would look to one run by some of the ex-AIG (P&C) executives; not one managed by short termers, policticians and pay czars.
Great reply. I was just going to type much of the same; such as, they are selling off their prime assets. Nothing is left, but the government is going to own hundreds of billions of shares of what???? And like you stated, who in their right mind would buy it. Even if it did get purchased, they would have to perform many reverse stock splits or never pay a dime in dividends. This is a total smoke and mirrors game and it’s perfect before election time.
I for one am not buying it…the story or the stock.
way off – suggest you go back to the 10K of 2009 all 750 pages of it, with the admonition by the street that AIG had “redefined” the basis by which assets were valued, and the AIG 11 non-life insurance presentation by Mr. Doyle who proudly proclaimed the asset base of 69 Billion. In retrospect, the 69 billion was made up of muni’s whose calculable value was generously increased by the overall redefinition of value, and whose security value of less than 47% AAA became a questionable asset.
Don’t tell me about GAAP, I’ve been in this business for 55 years, dealt on the most senior levels of AIG and have watched with some amusement the machinations of their reserving practices, and internal reinsurance “deals” covertly maintaining loss ratios whose efficacy was questionable.
You obviously forgot that less than one week after the first so called bailout AIG moved some 92 billion yen ( $ 845 million US ) to bail out ALICO whose majority of reserve was AIG shares. AIA’s problem is their high annuity portfolio of business, which is why a variety of people passed on the deal. The SPV’s are nothing more than more smoke and mirrors, which diminish the overall value of what little is left for common or in fact preferred share holders.
Fitch had it right, AIG’s total debt position with no hedge was not capable of calculation, Sanford Bernsteins pronouncement of the Chartis short fall in reserves while admirable and one of the first to physically question the efficacy of them is undoubtedly off by billions. The derivative position while certainly far less than the original 2.4 billion is still of concern. ILFC one of the “darlings” of the AIG portfolio was a tempting venture my some into the business of aircraft leasing with near eastern venture capital folks looking to acquire it, until the “unforeseen” specter of long tail and immediate debt showed its ugly head.
You can quote all of the “interesting” pieces of data from the groups 10Q’s which I also follow, and in fact write on, but the facts are, my friend, that this group couldn’t pay the American public back all that it owed, if we all lived another 50 years. This Government deal is nothing but smoke and mirrors
with the diminishment of shareholder value with the end result being minimal towards those of us who pay taxes.
Peter – I agree totally! Your post has more detail than mine, but the conclusion is the same. What also bothers me is that the “serious” business media is reporting this government PR as “truth!! Just read the WSJ stories (fairy tales!!).
@CurrentEE – I would not consider myself at the high end of “key talent” that left AIG; but I was at least in the middle of the pack. Insurance is a relationship business. When people move out of a troubled company a good part of the business they managed eventually will follow them, as does years of underwriting experience. I consistently managed books of business with combined ratios in the 80’s. The old AIG was a unique and highly successful P&C company. The new Chartis is the new Chartis.
I want to know when Obama is going to pay us all back for the 2 trillion dollars he spent and no one knows where it went. Google Federal Reserve expands balance sheet by 2 trillion. Bloomberg Lawsuit. You will not see this on MSNBC or CNN.
The AIG Bail Out (or whatever you want to call it) was instituted in late September 2008. Before Obama was elected. Let’s share the smell with everyone!
Let’s stop the name calling, all Sarah was pointing out was the truth under which this socialist administration has been operating. But under Obama the original 49 billion odd ballooned to 182.5 billion. The plan to “repay” is so flawed it makes no sense. Having spoken to friends on the street, they’re all sitting there laughing at this ridiculous ploy. Irrespective of who shot John and where is he buried, only time will tell as to whether this works, and in fact, whether the group known as AIG prevails and continues to conduct business.
To make matters worse for them, Judge Taylor 2nd CCT NY has approved the class action suit against AIG specifically for the period of 2006 through 2008
relative to asserted fraudulent reporting as to potential risk etc. This is going to open a huge can of worms when discovery finds exactly what had occurred, as if it is going to come as some huge surprise.
So, let’s all take a deep breath, and sit back and see what eventually occurs.
I am no fan of Obama, but the AIG bailout has to do with Federal Regulators and Investment Bankers. The fact that the cast of characters pre-dates Obama doesn’t matter. What does count are the facts. AIG has been demolished. Shareholder values are close to zero. And keep in mind that AIG was one of the most widely held stocks in the market; meaning that many, many people lost money. The money given to AIG is gone; much of it via a pass through to the investment bankers. These funds will never be repaid. AIG is and likely will be owned and run by the government for a very long time. And lastly, this smoke and mirror set of PR announcement by the government about AIG repayment is an insulting lie!
Wonderful news, the smoke and mirrors brigade has come full circle. Original pledge of 100% collateral for initial bail out funds of some $ 50 billion with Government ownership of 79.9% grew eventually to $ 182,5 billion on the same collateral with the Government still owning 79.9%. The sale of AIA if it actually occurs might bring in some $ 35 billion, the two other smaller non-life insurers may bring in $4 billion odd, and now we have the Government converting into 1.66 billion shares of preferred stock as well as issuing 75 million warrants at a strike price of $ 45.
Lest we forget, obviously the Government has, but unlikely the shareholders, that current trading of this worthless stock on the exchange needs to be divided by 20 for it’s physical real value of some $ 2 per share. The Government warrants are physically worthless; and the value of the 1.66 billion common shares needs to be divided by 20 for what would be an accurate description of true market value.
The American taxpayer has been taken to the cleaners, and the Government will crow over their ill gotten so called fortune, but those of us, who have spend their lives in the business of insurance, not the insurance business know otherwise, don’t we!
You could sell the entire group and never repay the full value of debt. This was a travesty from day one which never should have occurred, under the aegis of crying wolf, the earth would not have stood still and the economy of the world would have continued, albeit, a bit poorer, but perhaps wiser?
Respectfully
Yep, you nailed it.
I’m not holding my breath for an AIG payback…
Excuse the second comment, but lest we all not forget that they have not paid one cent in seven quarters of the 10% interest in dividends that were due on the initial bail out funding deal. How about starting with that little pay back, which appears to be simply and conveniently forgotten.
In the interest of sticking with fact, i beg to debate you Peter Polstein. You are acting like a clown/politician with your grandstand stmts that are not based in fact. I already responded to your prior lame comments from yesterday’s IJ AIG story with a long dissertation of how far off you are from understanding the real nature of this AIG/FRBNY/Treasury deal. Without reminding you of all the details again, how about this one piece taken from GAAP certified 2nd qtr 10Q from AIG in late June showing consistent and open payments of interest being realized in Net Income financials each qtr. (that means paid and lowering AIG’s net income results). You can go into any 10Q of AIG’s over the last 7 quarters and get this yourself for factual proof.
quote:
“Interest expense on the FRBNY Credit Facility was $755 million in the second quarter of 2010, compared to $1.4 billion in the second quarter of 2009, due largely to the reduction in
the balance when the preferred interests in the AIA and ALICO SPVs were issued.” Then read the Net Income stmt details.
here’s the link for you to see firsthand: http://www.aigcorporate.com/investors/2010_August/AIG2Q2010Results6Aug2010.pdf
read it and see recap of 2nd qtr Net Income stmt, FRBNY Interest and Amortization schedule and resulting payments made.
Peter, just be factual in your stmts and quit grandstanding. I am not an AIG fan, just someone who reads the details.
This is nothing but another feeble attempt at the classic “shell game”. The IPO “announcement” did not work so we have another plan. This time the Government will buy even more of AIG??!!?? In December 2000 AIG had a market cap of $242B; today the market cap is $24B, or less than 10% of what it once was. Furthermore, only $5B of the curent market cap is held by private investors; the rest is “owned” by US(A). In 2000 AIG was rated A++ and had little or no debt. Today there is a toal debt of $124B; absent the government backing the rating would be lucky to make B (meaning MUCH higher cost of working capital). The numbers quoted in this story do not add up!!! Much of the profitable parts of AIG have been (or will be) sold. The once powerful P&C business is gutted. Most of the key tallent has left (me included). Lastly, thinking that private investors will buy back the government AIG stock is a pipedream. I lost a sizeable amount of money on my AIG stock as did many true investors. Those holding the stock today are short term investors at best. If I wanted to make a long term investment in a long tem profitable insurance company, I would look to one run by some of the ex-AIG (P&C) executives; not one managed by short termers, policticians and pay czars.
Great reply. I was just going to type much of the same; such as, they are selling off their prime assets. Nothing is left, but the government is going to own hundreds of billions of shares of what???? And like you stated, who in their right mind would buy it. Even if it did get purchased, they would have to perform many reverse stock splits or never pay a dime in dividends. This is a total smoke and mirrors game and it’s perfect before election time.
I for one am not buying it…the story or the stock.
way off – suggest you go back to the 10K of 2009 all 750 pages of it, with the admonition by the street that AIG had “redefined” the basis by which assets were valued, and the AIG 11 non-life insurance presentation by Mr. Doyle who proudly proclaimed the asset base of 69 Billion. In retrospect, the 69 billion was made up of muni’s whose calculable value was generously increased by the overall redefinition of value, and whose security value of less than 47% AAA became a questionable asset.
Don’t tell me about GAAP, I’ve been in this business for 55 years, dealt on the most senior levels of AIG and have watched with some amusement the machinations of their reserving practices, and internal reinsurance “deals” covertly maintaining loss ratios whose efficacy was questionable.
You obviously forgot that less than one week after the first so called bailout AIG moved some 92 billion yen ( $ 845 million US ) to bail out ALICO whose majority of reserve was AIG shares. AIA’s problem is their high annuity portfolio of business, which is why a variety of people passed on the deal. The SPV’s are nothing more than more smoke and mirrors, which diminish the overall value of what little is left for common or in fact preferred share holders.
Fitch had it right, AIG’s total debt position with no hedge was not capable of calculation, Sanford Bernsteins pronouncement of the Chartis short fall in reserves while admirable and one of the first to physically question the efficacy of them is undoubtedly off by billions. The derivative position while certainly far less than the original 2.4 billion is still of concern. ILFC one of the “darlings” of the AIG portfolio was a tempting venture my some into the business of aircraft leasing with near eastern venture capital folks looking to acquire it, until the “unforeseen” specter of long tail and immediate debt showed its ugly head.
You can quote all of the “interesting” pieces of data from the groups 10Q’s which I also follow, and in fact write on, but the facts are, my friend, that this group couldn’t pay the American public back all that it owed, if we all lived another 50 years. This Government deal is nothing but smoke and mirrors
with the diminishment of shareholder value with the end result being minimal towards those of us who pay taxes.
In any event, be well
Peter – I agree totally! Your post has more detail than mine, but the conclusion is the same. What also bothers me is that the “serious” business media is reporting this government PR as “truth!! Just read the WSJ stories (fairy tales!!).
Oblama and his cronies think the recession ended in June of 2009!!!!!!!! nothing buy more rhetoric BS from the clown presidents peeps.
Boy Ex-AIG Employee, you certainly think highly of yourself “Key Talent” ??
@CurrentEE – I would not consider myself at the high end of “key talent” that left AIG; but I was at least in the middle of the pack. Insurance is a relationship business. When people move out of a troubled company a good part of the business they managed eventually will follow them, as does years of underwriting experience. I consistently managed books of business with combined ratios in the 80’s. The old AIG was a unique and highly successful P&C company. The new Chartis is the new Chartis.
I want to know when Obama is going to pay us all back for the 2 trillion dollars he spent and no one knows where it went. Google Federal Reserve expands balance sheet by 2 trillion. Bloomberg Lawsuit. You will not see this on MSNBC or CNN.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apx7XNLnZZlc&refer=home
The AIG Bail Out (or whatever you want to call it) was instituted in late September 2008. Before Obama was elected. Let’s share the smell with everyone!
Sarah’s an idiot! Bush is the one who initiated the bailout. When everyone realizes how stupid the fingerpointing looks, maybe it will stop!
Let’s stop the name calling, all Sarah was pointing out was the truth under which this socialist administration has been operating. But under Obama the original 49 billion odd ballooned to 182.5 billion. The plan to “repay” is so flawed it makes no sense. Having spoken to friends on the street, they’re all sitting there laughing at this ridiculous ploy. Irrespective of who shot John and where is he buried, only time will tell as to whether this works, and in fact, whether the group known as AIG prevails and continues to conduct business.
To make matters worse for them, Judge Taylor 2nd CCT NY has approved the class action suit against AIG specifically for the period of 2006 through 2008
relative to asserted fraudulent reporting as to potential risk etc. This is going to open a huge can of worms when discovery finds exactly what had occurred, as if it is going to come as some huge surprise.
So, let’s all take a deep breath, and sit back and see what eventually occurs.
Be well all
I am no fan of Obama, but the AIG bailout has to do with Federal Regulators and Investment Bankers. The fact that the cast of characters pre-dates Obama doesn’t matter. What does count are the facts. AIG has been demolished. Shareholder values are close to zero. And keep in mind that AIG was one of the most widely held stocks in the market; meaning that many, many people lost money. The money given to AIG is gone; much of it via a pass through to the investment bankers. These funds will never be repaid. AIG is and likely will be owned and run by the government for a very long time. And lastly, this smoke and mirror set of PR announcement by the government about AIG repayment is an insulting lie!