It looks like AIG is poised to join the ranks of UBS, Citigroup, and Merrill in leading the write-offs by financial institutions. Bloomberg is reporting that AIG is ready to write off another $5 billion.
June 27 (Bloomberg) — American International Group Inc. plans to absorb losses for a dozen insurance units after their securities-lending accounts suffered $13 billion of writedowns tied to the subprime-mortgage collapse during the past year.
The world’s largest insurer will assume as much as $5 billion of any losses on sales of the investments, up from a previous commitment of $500 million, said Christopher Swift, vice president for life and retirement services, in an interview. AIG also will inject an undisclosed amount of capital into some of the subsidiaries, he said.
Moody’s Investors Service and A.M. Best Co. both cited the writedowns in May when they downgraded New York-based AIG’s credit ratings. State regulators in Texas said they didn’t know AIG was investing cash collateral from the securities-lending business in subprime-linked assets and were concerned the insurance units hadn’t put aside enough capital to cover potential losses.
Good thing they raised all that capital.
See: Credit Crisis Timeline for a full list of writedowns and capital raising by institution and a timeline of the credit crunch.