2008 0912 - FCIC - 2008-09-12 Alejandro LaTorre Email to Geithner et al re Update on AIG
- 2008 0912 - FCIC - 2008-09-12 Alejandro LaTorre Email to Geithner et al re Update on AIG - 2p
- 2008 0913 - FCIC - FRB (Brian Peters/NY/FRS) -FRBNYAIG00510
We met with senior executives at AIG to discuss both their liquidity and risk exposure situation.
They estimate that they might have to pay out $18.6B across the firm over the course of next week if they were downgraded.
I. Liquidity
Breakdown of the $18.6B is:
- Failed rolls on ABCP: $4.7B
- Collateral posting on Muni GICs: $6B
- Collateral posting on Structured Lease GICs: $3B
- Collateral posting in derivatives contracts: $5B
As of close of business today, they have $8B in cash at the holding company.
- Outside of the holding co., the insurance subs have about $68B in securities lending liabilities to the 12 largest firms.
- Program is managed by the holding company (AIG Financial Products).
They are also large issuers of annuities and have $11 B of contingent exposure in their domestic retirement services business.
- These are retail but run by large sponsors who could encourage accounts to put back the annuities in exchange for cash if they lose confidence in AIG.
- These sponsors are U.S. banks who have exposure elsewhere.
- This could be on top of the $18b payout above.
- They have similar exposures in Japan but could not quantify the size.