LevonP
03-01-2009, 01:50 PM
NEW YORK (Reuters) - The board of American International Group Inc (AIG.N) was set to vote Sunday on a revised rescue package for the giant insurer which is expected to include an additional $30 billion commitment from the U.S. government, according to a source and media reports.
The agreement is likely to include more lenient terms on an existing government investment in AIG preferred shares and a lower interest rate on a $60 billion government credit line, a source familiar with the matter told Reuters on Saturday.
The following is reaction from industry analysts and investors:
ROBERT HAINES, SENIOR INSURANCE ANALYST AT CREDITSIGHTS
"The government really does not have the option of letting AIG totally blow up. The swap book at AIG Financial Products notional value is still more than $300 billion. This is not at a regulated insurance sub but is holding company exposure. The counterparties on most of the book are euro banks that would be hammered if the U.S. walked away."
"The market has known about the losses at AIG for a few days now and is expecting some form of bailout. If tomorrow we hear that no agreement was reached, watch out."
MARK KEENAN, AN INSURANCE PARTNER AT LAW FIRM ANDERSON KILL & OLICK (comment was made before details of final deal terms)
"If this deal is actually approved, it should go a long way in calming the markets and many of my clients (risk managers, policyholders and brokers) who have legitimate concerns about the long term viability of AIG and its insurance subsidiaries."
"The U.S. government is fully aware that many will criticize this deal as nothing more than a band-aid. The deal was made anyway. After all of these efforts, the message to me is that the U.S. government is committed to saving AIG --whatever it takes. After all, at this point, AIG is the U.S. government."
The agreement is likely to include more lenient terms on an existing government investment in AIG preferred shares and a lower interest rate on a $60 billion government credit line, a source familiar with the matter told Reuters on Saturday.
The following is reaction from industry analysts and investors:
ROBERT HAINES, SENIOR INSURANCE ANALYST AT CREDITSIGHTS
"The government really does not have the option of letting AIG totally blow up. The swap book at AIG Financial Products notional value is still more than $300 billion. This is not at a regulated insurance sub but is holding company exposure. The counterparties on most of the book are euro banks that would be hammered if the U.S. walked away."
"The market has known about the losses at AIG for a few days now and is expecting some form of bailout. If tomorrow we hear that no agreement was reached, watch out."
MARK KEENAN, AN INSURANCE PARTNER AT LAW FIRM ANDERSON KILL & OLICK (comment was made before details of final deal terms)
"If this deal is actually approved, it should go a long way in calming the markets and many of my clients (risk managers, policyholders and brokers) who have legitimate concerns about the long term viability of AIG and its insurance subsidiaries."
"The U.S. government is fully aware that many will criticize this deal as nothing more than a band-aid. The deal was made anyway. After all of these efforts, the message to me is that the U.S. government is committed to saving AIG --whatever it takes. After all, at this point, AIG is the U.S. government."