Bad Outweighs the Good in AIG

If you think the disclosure is bad for these financial insurers here, it is every bit as poor over there in the U.K., where we just learned that housing prices dropped the most ever on record.

Most of the major monoline insurers, and of course AIG (AIG - commentary - Cramer's Take), have exposure to Britain in ways that we are all too familiar with over here. The only difference is that I believe the trajectory was considered far more certain over there than here. AIG in particular bragged about this business in December, to show their diversification away from the U.S. Kind of like how Bear (BSC - commentary - Cramer's Take) bragged that by putting a lot of different mortgages together from Florida and California and the rest of the country and varying their ratings you have created a wondrous, diversified instrument called a CDO.

Yesterday, Erin Burnett, my partner in "Stop Trading" on CNBC, asked me about all of those assets that AIG has, like the great Chinese business, the leasing business and the like. They are all great businesses. But Citigroup (C - commentary - Cramer's Take) had great businesses, and they weren't enough to offset the losses. AIG's looking a lot like Citigroup -- lots of assets generating a solid return that is easily wiped out by the magnification of losses through leverage.

Or, in English, AIG is better than an Ambac (ABK - commentary - Cramer's Take) or an MBIA (MBI - commentary - Cramer's Take) for certain, but that doesn't mean you have to own the darned thing.

At the time of publication, Cramer had no positions in the stocks mentioned.

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