Insurance News Mon, Sep 15, 2024
Is the AIG insurance group heading for financial meltdown?
News that American International Group (AIG) has been forced into a $20 billion asset sale to rebuild its balance sheet has not been well received by the stock market. Better known as the sponsors for Manchester United Football Club, AIG is one of the largest insurers in the world but times are hard and the core business is suffering.
As well as announcing losses which totalled some $18 billion over the last 9 months the group is also reported to have a multi-billion dollar exposure to Hurricane Ike which is currently taking the US by storm (literally!). The share price has fallen by 79% over the last year and this seems to have caught the eye of the credit ratings agencies such as Standard and Poor’s (S&P;). Indeed it was an announcement by S&P; which prompted the fire sale of assets with a threat to reduce the group’s credit rating by an enormous 3 levels.
As well as the fire sale it is believed that AIG is working on a fund raising which should bring an extra $12 billion into the business to shore up the balance sheet. When you consider that the group holds asset valued at over one trillion dollars it is difficult to believe that it is in this mess.
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