Bailouts a thing of the past, huh? More presents for AIG! Via Yves at Naked Capitalism:
First from Bloomberg, “AIG Has $4.1 Billion Charge on Insufficient Reserves“:
American International Group Inc. said higher-than-forecast claims costs cut fourth-quarter profit by $4.1 billion, and $2 billion previously designated to repay its bailout will be used to bolster the property-casualty unit.
The insurer reached an agreement with the U.S. Treasury Department permitting the company to keep $2 billion of proceeds from the sale of Star Life Insurance Co. and Edison Life Insurance Co., New York-based AIG said today in a statement. Funds will be used by Chartis for losses tied to coverage including workers’ compensation and asbestos liability.
The troubling part is “keep”. Unless the Treasury got some form of consideration back from AIG, this sure looks like a gift.
American International Group Inc. said it will book a $4.1 billion charge when it reports results for the fourth quarter, as it adds to reserves at its Chartis property and casualty insurance unit….
AIG also said Wednesday that it signed a letter of agreement with the U.S. Treasury to retain $2 billion of the proceeds from the sale of AIG Star Life Insurance Co. and AIG Edison Life Insurance Co. to support Chartis’ capital.
Now with AIG, a mere two billion must look like mere rounding error, but again, pray tell exactly how this reversal of the TARP payback is being accounted for? We’ve had so much sleight of hand with AIG that nothing would surprise me. And with the Congressional Oversight Panel about to go out of business, any pushback is almost certain to be limited.