AIG & Government Fund Infusion; Barron’s (AIG)

Last week, Prudential’s PRU bid for AIG’s AIG Asian life insurance business, AIA Group, fell through. AIG stock is now trading at the $35 mark, and looks expensive at this juncture. AIG’s junior debt with 10% yield shows better prospects than the stock itself, since the debt is senior to $49 billion worth of preferred shares. These preferred shares are held by the Treasury and are backed by AIG’s assets. According to Barron’s, the government has infused funds in the insurer in different slabs. The insurer received $27 billion in Federal Reserve loans, $25 billion in preferred interest, $33 bullion in separate Fed loans and $49 billion in preferred stock.