A.I.G. in Debt-for-Equity Swap With New York Fed

[omagh]

Deleveraging continues with intent to IPO AIG subsidiaries...

http://www.nytimes.com/2009/12/02/business/02aig.html?partner=rss&emc=rss

 

A.I.G. said that as of Tuesday, its outstanding principal balance under the New York Fed credit facility was about $17 billion and the total amount available under the facility had been reduced to $35 billion from $60 billion.

 

A.I.G. said that under the agreement the New York Fed would receive preferred shares with a liquidation preference worth $16 billion in American Life Insurance Company and $9 billion in American International Assurance Company Ltd., which would be placed in special purpose vehicles .

[watsa_is_a_randian_hero]

You guys see this one yesterday?

 

American International Group was one of the market's biggest laggards as Sanford Bernstein analyst Todd Bault cut his price target 40% on concerns about the insurer's loss reserves that could have "major ramifications" going forward. Mr. Bault's analysis showed loss reserves were $11 billion short, with most of the deficiency in three casualty lines: workers' compensation, general liability and professional liability. One reason he offered: AIG has been using less reinsurance. The company declined to comment. That kind of shortfall could complicate its ability to retain customers and repay government debts. Shares fell 4.90, or 15%, to 28.40.

 

Underreserved by $11 billion???