In an attempt to expedite the process of paying back government debt, giant insurer AIG will sell its American Life Insurance Co. division to MetLife for about $15.5 billion in cash and shares as well as its AIA insurance unit in Asia to U.K. insurer Prudential PLC for $35.5 in cash and shares. Although both sales will generate approximately $31.5 in cash to pay back the New York Fed, some are worried about AIG being able to generate further capital after selling off these two valuable divisions.
AIG has announced it will withhold $21 million in bonuses from current and former employees of its Financial Products unit to reach its $45 million giveback target. The giveback target was set as a response to public outcry over $165 million paid to employees following the $182.3 billion taxpayer-funded bailout. Thus far, AIG has recovered about $40 million of the giveback target.
The new AIG intends to focus on selling property-casualty coverage to corporations as the core of its business after selling off its major life insurance units. Despite the progress, the American taxpayer’s role as an investor in AIG is still uncertain. There are concerns about the profitability of AIG’s property-casualty operations due to its recent charge to cover the claims of previously sold policies. Liberty Mutual and Chubb Corp have said that AIG lowered prices to levels that may be inadequate to cover claims. Analysts have speculated that AIG may need more than a decade to pay back all of its U.S. bailout obligations.
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I would say you sure have the nerve to invest in banking stocks. I have never regarded banks' insurance companies' financial services companies as real busineses. All that they do is recycle money. I also have never invested in any financial services companies and never will. Just look at their record almost 2 out of every 3 savings and loans went out of business in the 1980's and just think about what happened a couple of years ago. Do I need to say anymore. One other thing I would like to say most of the publicly traded subprime lenders are out of business today.
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