Insurance giant AIG teetering on the brink as it attempts to mount rescue plan

Published on Tuesday 16 September 2008 21:24

SHARES in US insurance giant AIG were under renewed pressure last night as the firm tried to cobble together an 11th-hour rescue plan.

AIG, which employs about 3,000 staff in the UK out of some 116,000 employees globally, suffered a further day of stock market pain after credit ratings agencies downgraded the firm, making it even more difficult for it to raise money.

The insurer had been granted a $20 billion (11.2bn) lifeline on Monday to help shore up its finances but concerns grew yesterday that it would need more cash to survive the fallout from the demise of Lehman Brothers.

Reports suggested that the US government was at least discussing extending a financial lifeline to the company.

AIG confirmed on Monday that it was reviewing its operations and looking at options with outside parties after shares fell dramatically last week.

The firm operates under three main brands in the UK – AIG UK, AIG Life and AIG Direct. It also sells insurance through high street names such as Argos and Boots, while the firm underwrites product warranties for John Lewis department stores.

However, the group is better known in the UK for its sponsorship of Manchester United, having signed a 56.5 million sponsorship agreement with the club in 2006 – the biggest shirt sponsorship deal in English football.

Meanwhile, former New York City mayor Rudy Giuliani yesterday said ailing US companies such as AIG should seek financial lifelines abroad since they were as important to the global economy as within the United States. "I would think that, for AIG especially, international help would not be unrealistic," he said at a hedge fund conference.

Former chief executive Maurice "Hank" Greenberg, who ran AIG for 38 years before stepping down in 2005, said the private sector should come to AIG's aid.