This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

AIG Stock Slumps, as Insurer Weighs Options

Updated from Monday, Feb. 23

American International Group (AIG - Get Report) shares came under further pressure Tuesday as reports circulated that the insurance giant plans to post a massive loss and may liquidate assets or seek further government aid to stay afloat.

The New York-based insurer's stock dropped 13 cents, or 25%, to 40 cents in afternoon trading. A year ago, before the government's emergency rescue of the firm, AIG shares traded above $50.

Several outlets reported on Monday that AIG planned to announce up to a $60 billion loss the following week, and was seeking additional assistance from the government. Such a loss would likely trigger more ratings downgrades, forcing the firm to put up more cash as collateral for its debt obligations.

AIG responded by saying it "has not yet reported fourth-quarter and 2008 year-end results," and is working with the Federal Reserve Bank of New York "to evaluate potential new alternatives for addressing AIG's financial challenges."

Bloomberg initially reported on Tuesday that AIG was also considering two bids for its American Life Insurance subsidiary to score extra cash. Though MetLife (MET - Get Report) made a preliminary bid of $11.2 billion, according to the report, though the price deteriorated to $8 billion due to its financial condition. Axa (AXA) made another bid for parts of the subsidiary, excluding operations in Japan.

However, later in the day, Bloomberg indicated that AIG's plan to sell assets to repay $60 billion in government loans had failed because there were not enough bids of adequate value. Instead, it may seek to overhaul its bailout package by swapping common shares for the government's preferred stake -- similar to a plan Citigroup also is exploring -- or restructuring loans into a combination of debt, equity, cash and stakes in its operating businesses.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AIG $55.33 0.00%
BAC $15.81 0.00%
C $52.42 0.00%
GM $37.31 0.00%
MET $50.83 0.00%


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs