AIG (NYSE: AIG) may have a new CEO, but his track record is no better than that of the man he replaced. The firm said its second-quarter net loss was $5.36 billion, or $2.06 a share. AIG blamed the housing and credit markets, but, of course, the real trouble rests with its risk management. According to Reuters, "AIG said it recorded $5.56 billion in second quarter unrealized market valuation losses on credit default swaps, the same area that led to losses in the prior two quarters."
While the company's insurance and investing units are still profitable, AIG may have to post similar losses in the next two quarters if the US credit and housing markets get worse. It has already moved ahead with its plan to raise $20 billion. It may have to add substantially to that to offset big deficits .
With AIG's stock at about $25 and a market cap of $72 billion, another capital injection cold drive shares down to $20.
In other words, AIG's shares may be down over 50% this year, but that does not make them a good investment. The stock could actually still be one of the most risky among large-cap firms. AIG joins many other financial companies in finding that replacing CEOs does them no good.
Douglas A. McIntyre is an editor at 247wallst.com.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
Reader Comments (Page 1 of 1)
8-07-2008 @ 7:00AM
gerald said...
Sell all your AIG stock before it tanks. I told all you investors that they would post another huge quarterly loss. I will be blogging all this quarter to make sure AIG losses another record amount. AIG is a bad faith insurer and you should not have any policies with this company!!! Tim Fowler in the Tempe,AZ claims office can kiss my b-ass!!
8-07-2008 @ 9:22AM
Chris K. said...
Didn't the new CEO just take over in June? That's hardly enough time to turn around a company like AIG, even if he was the best CEO the world has ever seen. However, don't be surprised if you see him take as many losses as he can in his first quarter or two while he can still blame it on the previous CEO.