AIG Stock: What You Need to Know

So how did AIG get to its current state of scrambling for survival? The following are recent insights from TheStreet.com -- specifically when AIG's CEO resigned in June.

Monday, June 16

From AIG's Sullivan Is Latest Credit Casualty:

The fallout from the subprime meltdown and related credit crisis has claimed another corporate chieftain.

Martin Sullivan has resigned as CEO of American International Group and will be replaced by AIG Chairman Robert Willumstad. Stephen Bollenbach, an AIG director and a former CEO of Hilton Hotels, was named lead director.

The insurance giant's board held a special meeting this weekend to consider Sullivan's fate. Sullivan had come under fire over the past month, after AIG raised $20 billion to cover $7.81 billion in first-quarter losses tied to writedowns on its portfolio of credit derivatives and mortgage-related products.

Read the full article.

From Cramer: AIG's Got More Problems (Video, Jun. 16):

The CEO switch will do little to turn around the insurance giant, says Jim Cramer.

Cramer: "You go back to that December 6th meeting and you realize that what you've got here is just an unfathomably bad portfolio... [AIG] is a company that spent a full day [Dec. 6, 2007] explaining to you why they had no problems and then six months later, it looks like they may be the worst [company in the financial sector]. This is a company that raised the dividend. Now they got to get rid of the dividend, if you ask me. This is a company that assured you that it could buy back shares as it had great liquidity. Now it doesn't have any liquidity... this is a really deeply troubled company and I think they need to do two or three more financings... one of the things we learn is that when you need more financing, your stock goes lower."

To watch the video, click the player below:

Plus, don't miss these earlier Wall Street Confidential videos with Cramer: I've Been Too Upbeat On Wachovia, AIG (May 28: The financials are going to need lots more money to keep them going, warns Jim Cramer.), SEC Needs to Investigate AIG (May 20: Cramer says that in light of the December [2007] analyst meeting webcast from AIG, the company's calculations were dead wrong -- and this is so unacceptable he calls for an SEC investigation.), AIG's Sullivan's Gotta Go (Feb. 12: Hear Jim Cramer's thoughts on the latest AIG scandal.) and AIG Got Cocky, Got Caught (Feb. 11: The insurer's auditing probe is a result of judgments on data that could not be modeled, says Cramer.).

From AIG Lending Unit Could Bring More Pain:

AIG officials have noted that mortgage lender American General Finance, which the insurer acquired for $23 billion as the housing boom started to ramp up in 2001, has contributed to its recent problems. But despite AIG's insistence that American General's underwriting standards were conservative, a longtime branch manager in Southern California tells TheStreet.com a different story.

According to the source, who requested anonymity for fear of reprisals from his former employer, American General was aggressively involved in the predatory lending tactics and delinquent underwriting standards that led to financial disaster and a storm of public criticism at subprime mortgage giants like Countrywide Financial.

Read the full article.