Source: CCTV.com

03-03-2009 11:02

The US government is giving insurance giant AIG access to 30 billion dollars in new funds, and will ease terms on aid already given out. Analysts say it's because the company is too big to fail.

The US government is giving insurance giant AIG access to  30 billion dollars in new funds, and will ease terms on aid already given out.

American International Group has reported a 4th quarter loss of nearly 62 billion US dollars, a record in US corporate history.

The US government's restructured bailout plan couldn't too soon. AIG will get an additional 30 billion dollars in aid. It will also be allowed to reduce interest payments on government loans. That could mean an estimated annual savings of nearly 1 billion dollars.

Analysts say the government stepped in again because AIG is too big to fail.

Bob O'Brien, stock editor for Barrons, "It's effectively one of the bricks at the very bottom of the financial pyramid and if you pulled that away, the whole financial services structure would effectively collapse. It would mean that billions of dollars in assets in other financial services companies are holding, would have to be written off and that would put further damage, further strain on an already precarious financial services market."

The insurance giant does business with virtually every financial institution in 130 countries. It has 30 million policyholders in the US alone.

Problems at AIG came from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default.

The government has now made four separate efforts to save the company,totaling nearly 170 billion dollars.

But some analysts worry the newest investment marks the US government's direct entry into the insurance sector, as well as exposing US taxpayers to additional risks.

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Editor:Qin Yongjing