Credit default swaps continue to slay companies like
American International Group
(AIG - Get Report)
and pummel the financial sector.
AIG delivered a stinging loss of $5.36 billion in the second quarter as CDS caused the company to lose $3.62 billion after taxes. Over the past three quarters, AIG has lost more than $25 billion, pretax, in CDS and other investments. The instruments were backed by mortgages that subsequently lost value causing the credit default swaps to plunge in value as well. Investors were stunned at the amount since the market was hoping that AIG's problems would start to level off. The share price was slammed by 16.9% to trade at $24.18.
Also getting hammered for its losses were
, whose shares tumbled 20% to $2.80. The mortgage insurer reported a $246.3 million loss in its second quarter and announced it was closing its Canadian operations. The quarter was killed by a $225.9 million loss due to increases in paid claims, loss adjustment expenses and loss reserve additions. The stock has lost 89% of its value over the last 12 months as the mortgage market meltdown showed no signs of letting up.
(C - Get Report)
took a dive after saying it would buy back roughly $7 billion in ARS. The banking giant agreed to pay $100 million in fines as part of a settlement with federal and state regulators. Citi will also pay a $50 million civil penalty to New York State and a $50 million penalty to the North American Securities Administrators Association. The stock dropped 3.7% to $18.97.