Probably few people besides AIG’s top U.S. executives and CEO Robert Willumstad know how things will shake out with the company. The insurance giant is expected to announce a massive restructuring any time now, to shore up its collateral obligations.
As for AIG United Guaranty Canada, AIG’s Canadian mortgage default insurance subsidiary, there’s been no word on how its parent’s U.S. challenges will affect it. A company spokesman we talked to this morning had no knowledge of any impending impact.
For the moment, there is little reason not to be optimistic. According to sources, AIG’s Canadian business is profitable and it’s got a 90% credit guaranty from the federal government. Moreover, it operates in a Canadian mortgage market that’s on very solid ground with reasonable lending standards and miniscule default ratios.
We’ll keep an eye on things and report back if we hear anything further.
Last modified: April 25, 2014
http://ca.news.finance.yahoo.com/s/15092008/2/biz-finance-problems-lehman-spill-several-canadian-companies.html
Gah…here’s a clickable version:
Problems at Lehman spill over to several Canadian companies
Business being profitable in Canada is not a concern at this time for AIG what is a concern is saving it’s self and cutting expenses, in my opinion they are finished unless a serious amount of cash i.e. Warren Buffet (Berkshire Hathaway) or U.S. Fed bails them out. AIG in Canada is a blip on the overall radar of AIG worldwide, and we would all be happy to go back to our Federal Monopoly cash cow (CMHC)and of course Genworth which barely makes a dent in CMHC business.
Hi John,
Appreciate the opinion. Our view is that no one really knows what will be a ‘concern’ at this point as AIG raises cash and restructures. It would be irresponsible for us to speculate, given what little information is available about the parent company’s plans. It does help that AIG United Guaranty is not a money-losing operation, though.
Moreover, I think most would agree that Canadians are better off with AIG adding competition to the marketplace, than with a two insurer world.
Cheers,
Rob
Hi Rob,
I was being sarcastic in my last comment above, regading CMHC and Genworth, meaning that it would not be good to go back to just 2 insurers, more options is always better for consumers.
Ahh, in that case, sorry John. The day’s market debacle has me in too literal a mood. :(
A few updates on AIG as of 8:30pm EDT:
* Citibank says “We believe AIG will survive, but we have little indication of how many business lines will ultimately need to be sold and how dilutive to shareholders’ future capital raising efforts will be.”
* That said, S&P just lowered the boom by cutting AIG’s credit rating. This is what AIG was trying to avoid because it will require billions of more capital in very little time. All bets are off.
I’m surprised other Canadian media outlets aren’t covering this story. Kudos to you guys. -Geoff
It could be a penny stock by noon, down another 50% in pre-market trading.
what are the prospects for annuity holders?
Oct 27, 2008
Will AIG survive and
will its stock go up
in the next 6 months.
Hi Harold, The U.S. government is sure hoping they survive. They’re 80% owners of AIG now…!