AIG Says Risk Rose on Munis; Defaults May Limit Liquidity |
| Bloomberg - Feb 25, 2011 |
American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity. The insurer declined as much as 6.3 percent in New York trading.
“Because of the budget deficits that most states and many municipalities are continuing to incur in the current economic environment, the risks associated with this portfolio have increased,” New York-based AIG said yesterday in its annual report to the Securities and Exchange Commission.
AIG said that “several” issuers of bonds it holds have been downgraded, amid budget pressures. As of Dec. 31, the company had more than $700 million of state general-obligation bonds from California, which has the lowest Standard & Poor’s credit rating of any U.S. state. It also held more than $200 million in the bonds from Illinois.
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- Posted: 2011-02-25 22:14:20
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