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AIG to keep $300 bln-$500 bln of FP portfolio
Wed Feb 17, 2010 9:05pm EST
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NEW YORK, Feb 17 (Reuters) - American International Group Inc (AIG.N) intends to keep up to a quarter of a derivatives portfolio from its Financial Products unit, which was behind the insurer's near collapse, a spokesman said on Wednesday.
AIG will keep derivatives with $300 billion to $500 billion in notional value as it unwinds positions at AIG Financial Products. AIG Financial Products will cease to exist, and either AIG or an external party may manage the positions that remain.
AIG wants to keep those positions because they have been de-risked and promise an upside as the markets improve, the spokesman said.
AIG Financial Products has cut outstanding trades to a notional value of $940 billion from about $1.9 trillion in September 2008 and contracts to 16,100 from 44,000.
In a February 2009 interview, Gerry Pasciucco, the unit's chief operating officer, said it was possible some assets better suited to a "run-off scenario" may linger on the firm's books beyond 2009, but were expected to be few in number. [ID:nN13526490]
The unit, which operated separately from the insurance operations that AIG was best known for, sold credit-default swaps and other hedging and investment products covering currencies, energy, equities and interest rates to clients around the globe.
Once the world's largest insurer, AIG almost collapsed because of these bets, as it was left on the hook for tens of billions of dollars in collateral payouts to some of the biggest U.S. and European financial institutions.
AIG Financial Products has also been a cause for public outrage against AIG, as it made large retention payments to its employees.[ID:nN0258054]
The U.S. government had to step in to prop up the insurer with an aid package that swelled to $182.3 billion. |
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