Montag, 2. März 2009


The somewhat surprising thing about AIG's 2008 financials is: Their gargantuan losses have occurred in just about all parts of their business. So the working assumption that the holding is a black hole, whereas the subsidiaries are in great shape, simply doesn't hold water. Whatever they have done, they made sure it has an impact on the bottom line of just about every business line.

Let's see:

Total 2008 operating loss is 109 bn US$.

Losses can be broken down as follows:
- Life Insurance North America: 32 bn $
- Life Insurance Rest of World: 6 bn $
- General Insurance North America: 7 bn $
- Financial Services North America: 42 bn $
- Asset Management North America: 9 bn $
- Asset Management Rest of World: 0.2 bn $
- Other North American businesses: 13 bn $

So the biggies are all in North America, but even "Life Insurance Rest of World", which is mainly the supposed Asian "crown jewels" lost a whooping 6 bn $!

Which parts of the empire were profitable? Just two:

- General Insurance Rest of World: 1.5 bn $
- Financial Services Rest of World: 1.3 bn $

Conclusion: AIG's financials are a total disaster, no matter where you look.

Now for the somewhat positive bit:

AIG still has a shareholders equity of 53 bn $. I couldn't quite figure out how much additional equity has been injected during 2008, but the line "additional paid-in capital" increased by 70 bn $, so I assume it's at least 70 bn $. In other words, without injections, equity would have been -17 bn $ by now. In other words: if the 12/08 accounts paint an accurate picture, most of the government money is still there.

If the company remains profitable in its core business, the investment may eventually be earned back for the new sovereign shareholder.

If there is no further deterioration of their asset portfolio, that is. I have no clue how aggressive or conservative their numbers are (after all, the bulk of their losses has only been incurred in Q4 2008. Who can say that's the end of it? So far, equity prices haven't exactly gone up in 2009...).

Oh, and there's another if: Customers have to stay loyal: Q4 life insurance premiums are down 39 % year-on year, general insurance premiums are down 13 %. Maybe it's a short-term dip reflecting the current uncertainty. Or maybe it's the first glimpse of tomorrow's much smaller AIG. In that case: Good luck to the American taxpayer!

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