10.13.2008

Eliot Spitzer Redux


Eliot Spitzer
American International Group staved off collapse on Tuesday after the U.S. Federal Reserve Bank of New York agreed to lend up to $85 billion to the cash-strapped insurer over two years in exchange for a 79.9 percent equity stake.

Below are some key dark days in the 89-year-old company's recent history.

2005

February - Former New York Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commissioner send American International Group subpoenas about "non-traditional insurance products and certain assumed reinsurance transactions.";

March - Hank Greenberg, who had led AIG since 1967, is forced out as CEO and replaced by longtime lieutenant Martin Sullivan;

May - Spitzer files a civil suit against AIG, saying the company, Greenberg and former chief financial officer Howard Smith, used "deception and fraud" to inflate the stock's price;

2006

February - AIG settles with SEC and state securities and insurance regulators, agreeing to pay $1.6 billion to resolve claims of improper accounting, and bid rigging;

2007

August - As the U.S. subprime mortgage crisis worsens, the company tells investors it is "very comfortable" with its exposure;

November - After third-quarter earnings fall 27 percent, the company concedes the subprime mortgage crisis is affecting results;

June - SEC begins probing how AIG valued its credit default swaps, which have emerged as a key weakness in its balance sheet;

2008

June - AIG replaces Sullivan with former Citigroup CEO Robert Willumstad after the company posts the second of two consecutive quarters of record losses. Total losses from the subprime crisis reach $18 billion, and total write-downs $25 billion;

Sept 13-14 - AIG officials reportedly meet top New York state officials at weekend seeking permission to liquidate some assets to raise cash, and approach the U.S. Federal Reserve seeking $40 billion in short-term financing to avoid rating downgrades;

Sept 15 - New York State gives AIG permission to access $20 billion of capital in its subsidiaries to free up liquidity to avoid a collapse by AIG, on the same day Lehman Brothers files for bankruptcy; AIG shares fall some 60 percent;

Sept 16, 2008- The Federal Reserve Bank of New York agrees to lend AIG up to $85 billion, repayable within two years, in exchange for a 79.9 percent stake, and former Allstate Corp CEO Edward Liddy becomes CEO.

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