AIG Stock Plummets to Below $9; Buffett Now in Rescue Talks?
The Insurance Insider
American International Group's (AIG) share price has fallen a further 30 percent in pre-market trading to below $9 this morning as investors digested the collapse of Lehman Brothers this weekend amid fears that the Federal Reserve may be reluctant to step in to help.
It comes as Warren Buffett's Berkshire Hathaway is now thought to be in talks with the firm as it stutters on the edge of a precipice brought about by the collapse in investor confidence over its vast exposures to its toxic credit default swap securities.
As of last week, Berkshire Hathaway was not thought to have an appetite to provide an enormous reinsurance contract protecting AIG from exposures written through its financial products division.
However, since then it has emerged that AIG has spoken to a series of buy-out firms - including KKR and JC Flowers - to raise $20bn in an assets fire sale while also approaching the US Federal Reserve for an emergency $40bn bridging loan.
This has led some doom-mongers to even suggest that the firm is preparing to write off up to $60bn, in addition to the $18bn in losses over the past three quarters. On Friday, Standard & Poor's put the company's credit ratings on negative watch, indicating a possible downgrade, which would squeeze the insurer's collateral requirements.
According to sources this morning, Berkshire Hathaway is now believed to have joined the queue of buy-out firms in talks which, according to one source, were described as "advanced"...
THIS IS A SUMMARY OF THE ARTICLE. SUBSCRIBERS TO THE INSURANCE INSIDER CAN READ THE ARTICLE IN FULL BY LOGGING IN AT WWW.INSURANCEINSIDER.COM.
Published on September 16, 2008
Are you retail Agent Looking for a Quote?