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AIG sees up to $8.5 billion in cash losses from CDS
A sign on an office building for AIG, American International Group, is pictured in Los Angeles, May 8, 2008.
Credit: Reuters/Fred Prouser
NEW YORK |
NEW YORK (Reuters) - American International Group Inc (AIG.N) said on Thursday potential cash losses on its portfolio of credit default swaps tied to risky mortgage debt could be as high as $8.5 billion, much more than previously disclosed.
Under two revised ways of assessing risk, losses were estimated at $5 billion to $8.5 billion, finance executive Steven Bensinger said.
The estimates are much higher than the $2.4 billion worst-case scenario disclosed by AIG, the world's largest insurance company, in the first quarter.
Losses on CDS, which guarantee underlying debt in the event of default, drove AIG to a second-quarter net loss of $5.36 billion.
On Wednesday the company disclosed its third consecutive quarterly loss greater than $5 billion. It has recorded nearly $25 billion in unrealized losses from writing down the value of its CDS portfolio, held by a financial products unit.
(Reporting by Lilla Zuill; editing by John Wallace)
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