So Much Fail…

Moody’s Investors Service cut AIG’s rating to A2 from Aa3, a two-notch downgrade. Standard & Poor’s Ratings Services lowered the rating to A-minus from AA-minus, a three-peg reduction and Fitch Ratings reduced its standing to A from AA-minus, a two notch cut.

Looks like a lotta jargon, huh? For an insurance company a four point swing in your Standard and Poor rating would be similar to your bank deciding you were as safe a loan risk as a hobo. It’s a measure of how well you would be able to respond in the event of a catastrophic loss… think of a town flooding. Whether or not the company’s ability to payout insured values was subject to market factors or not. However, AIG insures more than just property and casualties. They’re in investment banking along with aircraft leasing and a few other endeavours. For added ‘oomph’ S&P said this was only the first downgrade, with more to possibly follow.

These are retirment funds, life insurance policies and probably an investment fund or two as well, in addition to their straight property and casualty portfolio, that are about to hit the shitter. Bank runs make things worse, but seriously, if you have any paper with the name AIG on it, dump it now. You’re going to be at the mercy of the market when it finally drops and they will not be kind. You’ll be looking at risk surcharges and heavily downgraded values for your pay-outs. I’d say ING, Co-operators, Dominion and Allianz would be safe choices, but honestly, I have no idea what tommorow holds.

They’re hemorrhaging money from a variety of places and seem to have taken on the rather novel idea… seriously, this is a chuckler… of trying to use insureds property as collateral to shore up capital loans. I’m not even sure how that’s legal, but I guess they’re trying anything to turn back the tide of a trillion dollar bankruptcy. That number is the equivilent of Canada’s GDP.

Looks like Manchester United might even go down with them.

And people thought yesterday was bleak.