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 Bailout: Breaking Up Is Hard to Do

"The other solvent players in the industry are experiencing not the same kind of problems as AIG, but problems that are straining their capital base," says Adam Sherman, president of Firstrust Financial Resources. "So, those once-healthy suitors of AIG's businesses -- the Chubbs (CB - Get Report) of the world, the Fireman's Funds, the AXAs (AXA) and the Prudentials (PRU - Get Report) -- are all dealing with their own capital issues and they can't pay the dollar amount that AIG would find acceptable."

Sherman has been involved in the insurance business for over 15 years, and works with all the major firms to analyze product offerings for Firstrust clients. He says that while AIG wanted $4 billion for its American General unit, it only received bids in the $1 million range. CEOs of other large firms are performing due diligence for the assets AIG is shopping around, but "I don't think anybody feels comfortable buying something of that magnitude at this time, when the entire industry's credit rating has been downgraded," Sherman says.

Furthermore, buyers -- well aware of AIG's desperate situation -- are holding all the bargaining chips.

"You know that your neighbor has got to sell his or her car," says David Steuber, co-chair of the Insurance Recovery practice at Howrey LLP. "It's sitting there and you know that they absolutely positively have to sell that car. What are you going to do? You're going to hold on and wait and wait and wait until you get the lowest possible price."

4 of 6

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 $56.00 0.70%
BAC $16.22 1.38%
CB $99.88 -1.06%
JPM $60.89 -1.79%
PRU $82.60 1.96%


DOW 17,856.78 -278.94 -1.54%
S&P 500 2,071.26 -29.78 -1.42%
NASDAQ 4,927.37 -55.4390 -1.11%

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