- Abu Dhabi Will Aid Debt-Fraught Dubai 'Case by Case'
- Banks With The Biggest Exposure to The UAE
- Dubai's Debt Woes Signal New Era for Creditors
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Dubai Stock Selloff May Bring Buying Opportunity
- Longer Lines, Fuller Carts This Black Friday
- Big US Banks May Be Forced to Raise Capital: Bove
- Bank of America Amends Pay for Senior Executives
- Tiger Woods Out of Hospital After Accident
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
Text Size 
American International Group, the world's largest insurer, may have to raise more capital to bolster its balance sheet if its credit ratings are cut again, Goldman Sachs analyst Tom Cholnoky said in a note to clients.
 |
AP |
"Although AIG shares have rebounded from their recent lows, we do not believe that the company is out of the woods yet," said Cholnoky, adding that the company could face "significant capital pressures if its credit ratings drop one more notch."
AIG [AIG
Loading...
()
] last week reported its third consecutive quarterly loss of more than $5 billion, stemming from further declines in the value of assets linked to subprime mortgages.
AIG shares were down 51 cents, or 2 percent, to $24.36 in morning trade on the New York Stock Exchange, above their 52-week low of $19.73, set in July, but well under the $70.13 they fetched last October.
"We note that the rating agencies appear to have the company on a relatively short leash," said Cholnoky.
If AIG ratings, already lowered after a record first-quarter loss, are cut again, Cholnoky said it could force the company to put up an additional $14.5 billion in collateral, which along with capital hits from second-quarter losses "would essentially wipe out its recent capital raise."
AIG raised $20 billion of fresh capital to bolster its balance sheet in June, after it posted a first-quarter loss. On Wednesday, AIG reported a second-quarter loss of $5.36 billion as it took its third write-down on credit default swaps, a thorny area that has triggered more than $25 billion in unrealized investment losses for the insurer in recent months.
Cholnoky cut his outlook for AIG adjusted earnings for the next five years. For 2008, he cut his estimate to a loss of 37 cents a share from a profit of $1.67 a share, citing losses on credit default swaps as well as larger-than-expected losses at a mortgage insurance unit.
He lowered his profit estimates for the third and fourth quarters of this year to 66 cents and 79 cents a share, from 95 cents and $1.05, respectively.
Print
Email
- These four sectors will be the next to lead the market.
- Zhu Zhu Pets are this year's must-have toy, fetching $40 or more on eBay.
- From the why-didn’t-I-think-of-that file, we present Jason Sadler, a man whose job is wearing T-shirts.
- It may be the most unusual guide to business you'll read.
- Shopping for a gadget hound? The choices can be baffling. Here are a few that should be a hit.
- "The Who" will be the halftime act for Super Bowl XLIV on Feb. 7 in Miami. Is the NFL behind the times?
Data is a real-time snapshot *Data is delayed at least 15 minutes