INSTANT VIEW: AIG posts quarterly loss, to raise capital
NEW YORK (Reuters) - American International Group Inc (AIG.N) on Thursday posted a steeper-than-expected $7.8 billion net loss for the first quarter and said it planned to raise about $12.5 billion in capital to strengthen its balance sheet.
The world's largest insurer by market capitalization also said it was raising its dividend and replacing its chief financial officer.
+AIG shares fell 5.8 percent in after-hours trading.
The following is reaction from industry analysts and investors:
ANTON SCHUTZ, FOUNDER, MENDON CAPITAL, ROCHESTER, NEW
YORK:
"I'm assuming they've had conversations with rating agencies, and talked about what capital is necessary to maintain their credit ratings, so I think the capital raising is purely a reaction to that. They have triple-A ratings. They don't want to give that up. That's a holy grail.
"It will be important to see if they think they can recover some of the value of credit default swaps. This is a big down, I mean, they've written down what, $20 billion on these credit default swaps? Is there a point where they can write these back up again? It's a ton of capital coming back, if it comes back, and I think there's a good chance a lot of it will come back.
"Having a successful capital raise will be very helpful in terms of restoring some credibility, but they've recorded a couple of very tough quarters in a row now, so I think the eyes will be upon their ability to record a clean quarter sometime in the near future. We don't own shares, but I'm looking at buying some shares. There's a lot of value embedded in this franchise."
MICHAEL JAMES, SENIOR TRADER, WEDBUSH MORGAN, LOS ANGELES:
"It's one of the bigger financial names, and I think people were expecting a pretty dismal quarter, which is what they delivered. I think people are looking past most of the financial sector negatives and, considering we have pulled back some in financials, I would be surprised if we were down much more tomorrow off of this."
WILLIAM SMITH, CHIEF EXECUTIVE OFFICER, SMITH ASSET
MANAGEMENT, NEW YORK
"Why would you dilute your shareholders and raise your dividend? How do you justify that? This could be one of the craziest things I've ever seen in my life. We don't own AIG."
(Reporting by Dan Wilchins and Caroline Valetkevitch)
