It’s Been A Rough 12 Months For AIG
A year ago, AIG nearly collapsed in the wake of the Lehman Brothers bankruptcy and would have, if not for a massive federal bailout. A new CEO was installed in August, Robert Benmosche, who took over for Edward Liddy, whom was appointed by the Treasury Department last year to oversee AIG’s restructuring.
AIG built up a huge of amount of leverage and the accompanying risk, through the use of credit derivatives, a largely unregulated market. Those bets turned disastrous in the wake of the subprime collapse.
The insurer finally returned to profitability in the 2nd quarter after reporting over $100 billion in losses over a year and a half period. The company still owes over $182 billion to the federal government, although their new CEO has stated recently that the company will not be pressured into selling their assets in an unfavorable market.
AIG may be looking to restructure their bailout once again, seeking lower interest rates and a longer period of time in which to repay their debt. It also remain to be seen how much more of an active role the government will take since they control 80% of the equity of the company.
Still, many analysts believe AIG will remain a viable company even after repaying all of it’s debts and could still be a large force in the insurance world after selling off it’s non-core assets.
