Desperation Spin--When Losing $4.35 Billion Is 'a Rare Moment of Good News'

AIG Narrows Loss In First Quarter

By Brady Dennis Washington Post Staff Writer Friday, May 8, 2009

American International Group yesterday announced a first-quarter loss of $4.35 billion, down from a $7.81 billion loss a year earlier -- a rare moment of good news for a company that has been beleaguered by poor performance and public outrage in recent months.

. . . the government's total rescue package ballooned to more than $180 billion . . . it plans to accelerate the separation of its global property and casualty insurance businesses from the parent company as part of an effort to restructure itself and re-brand its more profitable divisions. The new company, AIU holdings, would house some of AIG's most successful insurance operations and employ 44,000 people in scores of countries.

In the meantime, the company's stock price has more than quadrupled, from 42 cents a share on March 2 to $1.95 yesterday.

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The economic community (if such a group can truly be identified) is so desperate for good news--particularly those rare moments of it--that a company losing $2 million an hour, 24-7, for ninety consecutive days is heralded as having a great quarter.

Breathlessly, WAPo reports that AIG's share price more than quadrupled yesterday. Not to worry that the base price from which it rose was a shadow 1% of what it was a year ago. Not to worry they're $180 billion in hock and not anywhere near a profit.

What kind of game is it, that allows a 99% loss to morph into a quadruple win, ending down 43 points?

Don't even ask who's going to get stuck with the bill for the separation of its global property and casualty insurance businesses. The tab for that one is neatly tucked under the public plate.

If that re-branding as AIU Holdings doesn't work out, they might try IOU Holdings--it's got a clever ring to it and Wall Street is always a sucker for repackaging.