The Star Online: Business
The Star Online: Business |
- AIG loses US$4 billion on planes, weak markets
- MF Global's Corzine sued by investor over collapse
- G20 mulls boosting global liquidity through IMF
| AIG loses US$4 billion on planes, weak markets Posted: 03 Nov 2011 05:37 PM PDT NEW YORK (Reuters) - Insurer American International Group lost more than $4 billion in the third quarter, as its aircraft leasing unit took an impairment charge on a portion of its fleet and the fair value of the company's one-third stake in Asian insurer AIA fell. It was the 10th time in the last 15 quarters, dating to 2008, that AIG lost at least $1 billion. Shares fell 3.2 percent in after-hours trading after the company announced its financial results, then rebounded a bit after AIG said it would launch a $1 billion share buyback. AIG's core insurance businesses were profitable on an operating basis, and its mortgage insurance unit both raised prices and gained market share amid difficulties in that industry. But those results were not enough to overcome the charges, which were partially driven by declining equity and debt markets during the quarter. AIG reported a loss of $4.11 billion, or $2.16 per share, compared with a year-earlier loss of $2.52 billion, or $18.53 per share. In the year-earlier period AIG took a number of charges on asset sales; it also had a smaller share count. On an operating basis AIG lost $3.04 billion, or $1.60 per share. Analysts polled by Thomson Reuters I/B/E/S had on average expected a loss of 63 cents per share in the quarter, though the range of estimates was wide, from a loss of 22 cents to a loss of 99 cents. IMPAIRED PLANES, SHARES AIG said that ILFC, its plane leasing business, took a $1.5 billion impairment on 95 planes as customers' appetites shifted toward newer, more fuel-efficient aircraft. Last February, Chief Executive Bob Benmosche said he did not expect any further large charges for the business this year, after it took roughly $1 billion in write-downs in the last six months of 2010. AIG said it lost $2.3 billion on the declining fair value of its stake in AIA during the third quarter. AIG took AIA public late last year in Hong Kong. It recently became eligible to start selling AIA shares after the IPO lockup expired. AIG has also filed to take ILFC public. Proceeds from the sale of AIA shares and from any ILFC IPO are already earmarked to pay back some of the U.S. Treasury's remaining $50 billion interest in the company. The government rescued AIG from the brink of bankruptcy in September 2008, at a price tag that exceeded $182 billion. The Treasury still owns a 77 percent stake in what was once the world's largest insurance company. In the third quarter, AIG also had substantial catastrophe losses totaling $574 million, mostly because of Hurricane Irene and Tropical Storm Lee. Beyond the charges, though, AIG said its insurance units had posted nearly $900 million in pretax operating income. Property insurer Chartis saw net premiums written rise nearly 1 percent, though the gain was attributable to foreign exchange benefits. Pricing improved in its U.S. commercial business, echoing similar results from other insurers as the market rebounded. SunAmerica's life insurance sales rose 14 percent, while assets under management also rose. Full content generated by Get Full RSS. |
| MF Global's Corzine sued by investor over collapse Posted: 03 Nov 2011 05:36 PM PDT NEW YORK (Reuters) - In what could herald many such investor lawsuits, MF Global Holdings Ltd Chief Executive Jon Corzine and three other company executives were sued by a shareholder over the futures brokerage's collapse, leading to an October 31 bankruptcy filing. The complaint filed Thursday in Manhattan federal court by shareholder Joseph DeAngelis accused the executives of having "continuously touted" MF Global's financial controls and liquidity, despite knowing their statements were false and misleading at the time they were made. It said that as problems became known, MF Global's share price plunged, wiping out $585 million of market value in a single week. The complaint seeks class-action status on behalf of purchasers of MF Global common stock from May 20 to October 28. Other defendants are Chief Financial Officer Henri Steenkamp, Chief Operating Officer Bradley Abelow and Chief Risk Officer Michael Stockman, according to the complaint. MF Global was not named as a defendant. U.S. regulators are conducting a broad review of MF Global business practices as they try to track down more than $600 million of missing customer money. MF Global filed for Chapter 11 protection after its bets on European sovereign debt scared away clients, counterparties and investors. The case is DeAngelis v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-07866. Full content generated by Get Full RSS. |
| G20 mulls boosting global liquidity through IMF Posted: 03 Nov 2011 05:33 PM PDT CANNES, France (Reuters) - The Group of 20 is considering injecting billions of dollars into the world economy through the International Monetary Fund to increase global liquidity, G20 sources said on Thursday. The idea being discussed is to replicate a 2009 decision by G20 leaders that agreed to a special allocation of $250 billion of IMF Special Drawing Rights, the IMF's internal unit of account, to its 187 member countries. G20 European sources said that French President Nicolas Sarkozy was pushing to include a reference to the SDR allocation in a final G20 communique on Friday. Some members could choose to sell part or all of their new SDR allocations to other members in exchange for hard currency, for example to meet balance of payments needs, while other members could buy more SDRs as a means of reallocating their reserves. G20 sources said euro zone countries, worried about the sovereign debt crisis, were talking about the possibility of pooling their SDR allocations in some way. One source from a large emerging market country said that if euro zone countries combined their SDR allocations, it could make available roughly $200 billion to Europe. The IMF created SDRs in 1969 as a way to support its member countries. They are allocated according to members' IMF quotas, which are broadly based on a country's relative size in the world economy and which determines its voting power. The idea of a special SDR allocation was raised during G20 discussions on increasing IMF resources to boost the institution's firepower to tackle future crises. One European source said a figure of $1 trillion was mentioned as a potential target for the increase in IMF lending resources, although the person emphasized there was no formal number. There is growing concern that Greece could face a disorderly default, with potentially powerful repercussions for other highly indebted countries such as Italy. "There is a realization the fund can play a role, and it needs to be adequately resourced and have the right facilities to play that role," one G20 official said. "That sense is in every delegation." "The G20 will be specific in their determination to increase resources, but it is unclear how specific they will be," another G20 source said. The G20 is expected to endorse a new IMF credit line to help countries facing economic shocks beyond their control, a G20 official familiar with the matter said on Thursday. The new Precautionary and Liquidity Line would be built into an existing credit facility for good performing countries facing balance of payment needs caused by exogenous shocks. The official said IMF member countries would have to request the line the credit, which would be made available over a period of six months without IMF conditions. The amount of financing would be capped at about 500 percent of each members' IMF quota, or subscription. The IMF board is set to discuss the proposal next week, although approval by the G20 would lend political momentum. Asked whether such a line of credit would be available to countries such as Italy or Spain, which are facing market pressures from the debt crisis in Greece, the official said: "It would not be a good characterization." Full content generated by Get Full RSS. |
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