AIG Turns a Profit, Begs Treasury for Another $4.2 Billion
AIG turned a profit but needed yet another Treasury lifeline? I am absolutely baffled. Kill this thing already.
American International Group Inc., the insurer rescued by the U.S., tapped the Treasury Department for another $4.2 billion to help restructure its money-losing mortgage guarantor and the plane unit it’s trying to sell.
AIG accessed about $2.1 billion from its Treasury facility on Aug. 13 and told the government today it would draw down another $2.1 billion, the New York-based company said in a regulatory filing. AIG got the $29.8 billion facility in April as part of its fourth bailout.
“It shows that they’re still having trouble getting cash to continue to run their operations” without government support, said Sandler O’Neill Partners LP analyst Paul Newsome. “That’s despite the fact you’ve had some really favorable things happen, like the credit markets getting better.”
AIG was bailed out in September 2008 to prevent losses at banks that bought derivatives from the insurer. The $182.3 billion rescue includes a $60 billion Federal Reserve credit line, up to $52.5 billion to buy mortgage-backed securities owned or backed by the insurer, and a Treasury investment of as much as $69.8 billion in two facilities. AIG has already drained one of the Treasury programs, valued at $40 billion.
AIG is using Treasury funds to buy shares of International Lease Finance Corp. held by one of its insurance units, the company said in the filing. The transfer may ease the eventual sale of Los Angeles-based ILFC or its assets, Newsome said.
But wait, I thought OMG AIG turned a profit?!
AIG reported its second profitable quarter in a row early Friday, as stabilization in its insurance businesses, and the credit and mortgage markets helped boost results.
The troubled insurer said its net income rose to $455 million, or 68 cents per share, an improvement over the $24.5 billion loss from a year earlier. Results included a one-time net charge of $1.5 billion for capital losses and hedging.
Without the charge, AIG would have earned $1.9 billion in the quarter, or $2.85 per share. Analysts polled by Thomson Reuters, who typically exclude one-time events, forecasted earnings of $1.98 per share.
Sales for the New York-based company rose 189% to $26 billion, topping analysts' forecasts of $23 billion.
"Our results reflect continued stabilization in performance and market trends," said AIG Chief Executive Robert Benmosche in a statement. "AIG employees are working to preserve the strength of our insurance businesses in a challenging market."
In August, AIG reported that it had returned to profitability after six straight losing quarters, a stretch in which the company lost more than $100 billion.
What a joke.