credit crisis is not over yet, page-2

When you read this, it's really scary. some CEOs are hiding and drop the bad news one by one

"AIG's financial products unit responsible for the swaps guaranteed more than $460 billion of assets for fixed-income investors at the end of March, including $60.6 billion in securities tied to subprime mortgages."
"The possibility that the free fall in losses from its credit default swap exposures could prompt an additional capital raise in the near term lends more credence to our skepticism on what the future holds for AIG," Paisan said.

Credit default swaps are essentially a type of insurance on complex financial contracts.

Like other insurers, AIG has been hit hard by deterioration in the credit markets amid concerns that complex, structured investments it insures will increasingly default.

"Not only are we concerned about the uncertain nature of the CDS losses, but the core insurance operations appear to be underperforming as well," Paisan said.

Last week, AIG reported a worse-than-forecast $5.36 billion loss on more mortgage-related write downs.

It was the insurer's third consecutive multibillion-dollar quarterly loss, underscoring the continuing problems for the New York-based company and others that hold securities tied to the withering housing market.

"We believe that the company has a long way to go before we start to see some relief and before management restores confidence with investors that they in fact have the ability to turn the company around and refocus on the underlying property-and-casualty business," Paisan wrote.

Late Monday, JPMorgan Chase & Co. said in a regulatory filing that its mortgage-related losses so far in the third quarter already outnumber losses in its investment bank's portfolio in the previous three-month period, sparking fresh concern over the lingering problems in the credit markets.


Read the extent of AIG involvement in the toxic debacle and how much more exposure they have left to writeoff !
AIG holdeers better be prepared for billions of writeoffs and losses to continue for quarter after quarter as the hundered of billions of cdo's are written off first for sub prime then for alt a then for prime looking at the numbers IMO as well as the catastrophic decline in the organic business it looks like bankrupcy is very much a possibility for aig !


Some analysts believe AIG may have more losses ahead of it.

"Management either seems unaware or unwilling to admit the full level of the company's exposure to risky assets," said Byron MacLeod of Gradient Analytics. He noted that the collateral AIG has put up to offset unrealized losses, related primarily to the credit default swaps portfolio, has risen to $16.5 billion in the second quarter from $9.7 billion in the first quarter and from $5.3 billion in the fourth quarter.

"There's no quick fix here for the company," MacLeod said. "Things are still deteriorating for AIG's assets, so it's really hard to call a bottom at this point."

AIG lost $5.36 billion in the April-to-June period, or $2.06 per share.
After excluding one-time items, the loss per share came to 51 cents -- much worse than the 63-cent gain that analysts were anticipating.

AIG's general insurance segment saw a 54.3 percent decline in operating income to $1.39 billion, and its life insurance and retirement services division saw a 10 percent decline in operating income to $2.61 billion. The company's asset management unit also suffered a decline in income.