AIG reports record $61.7b loss
March 4, 2009 - 0:0
Insurance giant AIG has reported a loss of $61.7b (£43b) in the final three months of 2008 - the largest quarterly loss in corporate history.
And the firm will receive an extra $30b from the U.S. government as part of a revamped rescue package.AIG has already received $150b in financial support - the biggest bailout by far of any U.S. company.
Stock markets slid sharply as AIG's plight underscored fears about the health of the global financial system.
The Federal Reserve and the Treasury said that AIG posed a “systemic risk” to the global financial system.
“The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.”
As well as insuring households, AIG plays a key role in insuring risk for financial institutions around the world.
The news of AIG's historic loss comes as HSBC, Europe's biggest bank, seeks to raise £12.5bn ($17.7b) to strengthen its finances following a 62% fall in annual profit.
The revamped rescue package also involves a restructuring of AIG's operations.
It calls for the Federal Reserve to take stakes in two of AIG's international units in exchange for reducing AIG's debt.
The new measures will also effectively cut the interest payments the insurer must pay to the Federal Reserve.
The AIG financial support is about three times greater than that given to Citigroup, which has received $50b, and Bank of America, which has received $45b.
AIG chief executive, Ed Liddy told the BBC that the loss, while hefty, could be explained.