This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

AIG Gets $30B More in Government Help

Stocks in this article: AIG

Updated from 1:14 p.m. EST

American International Group (AIG) confirmed widespread reports on Monday by reporting a huge quarterly loss and saying the government will provide additional aid to keep the insurance giant solvent.

The Treasury Department has created a new $30 billion equity capital facility in exchange for non-cumulative preferred stock in AIG, in addition to the $150 billion it has already lent the insurer. The Treasury and the Federal Reserve also outlined a massive restructuring plan for AIG's existing debt, easing up on terms and accepting payment in the form of preferred stakes in relatively healthy subsidiaries.

The new plan was unveiled as AIG reports a record fourth-quarter loss of $61.7 billion, or $22.95 a share. Those results compare with a loss of $5.3 billion, or $2.08 a share, a year earlier, and drastically fell short of estimates. Analysts surveyed by Thomson Reuters, on average, forecast a loss estimate of 37 cents a share on revenue of $24.82 billion.

Analysis
Discussion
Stock Rating

Despite the dour report, and a broad market decline, AIG shares surged nearly 24% during Monday trading. The stock closed flat at 42 cents. A year ago, it traded near $47.

Following the loss and restructuring announcements, Moody's and Fitch affirmed ratings for some types of AIG debt and said that the plan provides some stability. However, Moody's issued a "negative" outlook, citing potential loss of customers, distributors and employees, as well as uncertainty regarding ownership and capital structure.

Moody's confirmed AIG's senior debt at "A3," and the financial-strength rating on the core property and casualty business that AIG plans to retain. However, it downgraded subordinated debt to "Ba2" from "Baa1." Fitch affirmed "A" ratings for long-term issuer default rating and senior-unsecured debt, as well as an "AA-" financial strength rating for insurance subsidiaries. However, it downgraded junior subordinated debt and trust-preferred securities to "BB" from "A-", with several remaining on "rating watch."

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!

Markets

DOW 17,655.52 +298.65 1.72%
S&P 500 2,047.63 +34.74 1.73%
NASDAQ 4,730.4950 +86.1830 1.86%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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