In a year when a lot of U.S. financial firms were shrinking their exposure to Europe, American International Group increased its exposure to European sovereign debt by over $700 million.
AIG now says it has $4.4 billion of exposure to European sovereign debt, compared with $3.7 billion at the end of 2010. It also has a whopping $5.8 billion of exposure to European banks. That creates a total European exposure of $10.2 billion.
“AIG believes that its combined credit risk exposures to sovereign governments and financial institutions in the euro zone are manageable risks given the type of exposure and the quality and size of the issuers,” the company said in its last quarterly filing.
Much of that increased exposure came from buying German bonds. AIG’s exposure to Germany’s debt grew from $1.1 billion to $1.9 billion, according to an SEC filing. The company also has an additional $957 million of exposure to German banks.
But AIG also grew its exposure to Spain, from $257 million to $294 million. It also disclosed $779 million of exposure to Spanish banks.
Exposure to France also grew, to $1.171 billion from $1.134 billion. Exposure to French banks sits at $933 million.
Exposure to the sovereign debt of the Netherlands went from $341 million to $436 million. Bank exposure is $2.2 billion for the Netherlands. Exposure to Finland went from $34 million to $88 million.
Exposure to Portugal went from $6 million to $7 million, with no exposure to Portuguese banks.
AIG did, however, dramatically reduce exposure to Italy, from $448 million to just $114 million. Exposure to Italy’s bank is $293 million. AIG also doesn’t own any of the bonds issued by Greece or Ireland.
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