American International Group has already taken $61 billion of the $85 billion loan offered to it by the U.S. Treasury, a decision that has credit-rating agencies scrambling to understand what happens next.
The insurance giant’s new CEO, Edward Liddy, told analysts in a conference call that much of the cash had gone to AIG’s structured-finance unit and to its securities lending business, as well as to daily operations, reports The New York Times.
The announcement led both Moody’s and Standard & Poor’s to immediately downgrade AIG.
“The $61 billion draw to date on the facility is much larger than we had previously anticipated,” Rodney A. Clark at Standard & Poor’s told the newspaper.
AIG is in the middle of a massive asset fire sale, ditching global holdings even as the ability of other financial institutions to buy them up evaporates. Banks across Europe are reaching out to their own governments now for the same kind of help AIG got from the U.S. government only weeks ago.
If successful, the fire sale would cut AIG revenues in half, calculates the Financial Times.
The company’s U.S. property and casualty operations and its foreign general insurance business, which it expects to keep, generated $40 billion of AIG’s total revenues of $110 billion in 2007.
"A strong, viable and nimble AIG will emerge from this crisis," Liddy told analysts in the conference call.
"This is going to be a formidable company that emerges from this."
© 2017 Newsmax. All rights reserved.