AIG (AIG) continues to bleed cash and is running out of time to sell off assets as vultures are waiting in the wings.
The insurance giant, as of Wednesday, had borrowed $72.3 billion of the $85 billion federal bailout facility. Additionally, it had used $18 billion of the Federal Reserve Bank of New York $37.8 billion securities lending facility. At this rate, AIG will run dry in eight weeks. According to interviews given by Mark Tucker, CEO of Prudential PLC (PUK), the U.K. financial services company, which has insurance interests in the U.K., U.S. and Asia, is licking its chops waiting for the right moment to pounce.
AIG CEO Edward Liddy said in a PBS interview aired on Wednesday that the requirement for additional cash depends on "our ability to stop the bleeding." Liddy added "but it's also what happens in the capital markets. To the extent they continue to go down and we have to keep posting collateral. ... it's possible it may not be enough." This scenario was identified as a possibility two weeks ago and, if the government had not offered the securities facility, AIG would have already bled dry.
Prudential's approach is eerily similar to that of another British predator, Barclays (BCS), which initially indicated interest in Lehman Brothers' assets only to withdraw. After Lehman failed, Barclays then moved in and picked off the best bits for a bargain price.Prudential, however, has picked on a huge animal and there are many parts of AIG that have little appeal. AIG has been given a lifeline by the Fed and needs to use it before the requirement for more cash becomes a desperate plea.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV