TEXT OF STORY
Scott Jagow: Now, let’s follow up on one of the recent shipwrecks in the financial industry, AIG. A couple weeks ago, the government loaned AIG $85 billion. This morning, the company will tell us how it might pay that money back. Ashley Milne-Tyte reports.
Ashley Milne-Tyte: Insuring against things like shipwrecks and natural disasters used to be AIG’s core business. But plain insurance is only part of the mix today.
Christopher Whalen runs Institutional Risk Analytics. He says a few years ago, the company got involved with so-called credit default swaps. It took bets made by investors that that other companies would default on their bonds and loans. And that nearly brought AIG down. Fortunately, he says, there are some bits of AIG its competitors still might like to buy.
Christopher Whalen: I think the most saleable pieces are probably the leasing business and the insurance underwriters, which are reasonably solid.
He says private equity funds would be interested in AIG’s insurance units. Whalen says the company should have stuck to what it knew best.
Whalen: Cause the old insurance business is a, you know, mid-double-digit gross margin business. It’s very nice. And they just weren’t satisfied with that.
Now he says they’ll probably have to sell much of that business to pay back Uncle Sam.
In New York, I’m Ashley Milne-Tyte for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.