NEW YORK -- American International Group Inc. says it will end $12.5 billion in the coming months as the insurer looks to shore up a outstanding background that has been rocked by deterioration in the reliability markets. AIG shares tumbled $3.27, or 7.4 percent, to $41.45 in after-hours trading Thursday after the proprietorship disclosed it needs refreshed dough and reported a first-quarter denial of $7.81 billion.
The first-class raising essay will be a two-step process, with the word go platter estimated to elate $7.5 billion through an present of overused stock and equity units. The disinterestedness units will consist of subordinated accountability securities and contracts that want the holders to purchase AIG banal at a future date. No pricing for the offerings, nor a certain date for when the gift will be completed, was disclosed. Citigroup Inc. and JPMorgan Chase & Co. are managing the offerings. Once the $7.5 billion donation is completed, AIG will prompt an additional $5 billion through an contribution of weighty even-handedness fixed-income securities.
AIG, the world's biggest insurer, has yet to squeak a schedule for when it will make the securities. All of the new wealth is being raised in response to the hard hits AIG has captivated from deterioration in the faithfulness markets, which led the insurer to be deprived of billions of dollars for the second staid quarter. As defaults peremptorily increased on mortgages beginning in the middle of 2007, investors shied away from purchasing all but the safest debt. Because of the illiquidity in the recognition markets the value of hazardous responsibility has plummeted, forcing companies be fond of AIG to drop the value of their investments in products such as creditation default swaps and mortgage-backed securities.
"While we anticipated a unmanageable trading environment, the burdensomeness of the unrealized valuation losses and flag in value of our investments were beyond our expectations," Martin Sullivan, AIG's president and main executive, said in a statement. Problems in the put markets have fake other monetary services firms, including Citigroup and Merrill Lynch & Co., to put forward billions of dollars in different splendid as well. New York-based AIG extinct $7.81 billion, or $3.09 per share, during the region ended March 31, compared with emolument of $1.58 per share, or $4.13 billion, during the year-ago period.
It obsolete more than $5 billion during the decisive accommodate of 2007. Analysts surveyed by Thomson Financial, on average, presage a disappearance of 76 cents per deal in the news quarter. AIG disoriented $9.11 billion in its credit-default swaps portfolio during the before quarter. The swaps undertaking to travel losses on $579 billion in bonds or other kinds of debt.
Losses in its investment portfolio, which includes liability backed by troubled mortgages, totaled $6.09 billion. AIG says it confounded $352 million in its mortgage surety business, United Guaranty, which makes headmistress and incline payments when borrowers yearn for mortgage payments. Overall, the indemnity scribble responsibility at AIG was to some degree absolutely compared with the maiden quarter last year.
Net premiums written kill less than 1 percent during the triumph fifteen minutes to $12.08 billion. AIG's concluding premiums written totaled $12.11 billion during the same thirteen weeks last year.
Separately, the billet of directors approved a 2 cent per share, or 10 percent, rise to its four times a year currency dividend, to 22 cents. The dividend will be paid Sept. 19 to shareholders of performance on Sept. 5. The comrades also appointed Steven Bensinger imperfection chairman of economic services.
He in days served as overseer vice president and greatest financial officer at AIG. He will endure in his current post until a replacement can be found, the company said.
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