AIG, other mortgage insurers fall on loss fears
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Thu, 10 Jul 2008 20:44:01 GMT |
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Hamilton, Bermuda (Reuters) - Shares of American International Group Inc , the world's largest insurer, fell sharply on Thursday on concerns that a rating cut at its mortgage insurance unit could signal more losses in the pipeline."Everything is bleeding together," said Rob Haines, an analyst with research firm CreditSights, pointing to a broad decline in mortgage insurance stocks after Moody's Investors Service downgraded mortgage insurance units at AIG, PMI Group and Mortgage Guaranty Insurance Co .AIG fell 8.22 percent, or $2.15, to close at a 12-year low of $23.99, making it the biggest drag on the Dow Jones industrial average <.DJI> and Standard & Poor's 500 index <.SPX>.Meanwhile, PMI fell 4.39 percent and MGIC closed down 22 percent."Everyone is concerned about where the next shoe will drop," said Haines, adding that for AIG, investors are also skittish about new and unproven management.Moody's late on Wednesday cut the insurance financial strength ratings on AIG's mortgage insurance arms one notch to "Aa3," the fourth-highest investment grade. The outlook is also negative.AIG's shares have fallen more than 65 percent in the last year as it has posted more than $20 billion in write-downs on assets linked to subprime mortgages, leading some shareholders to call for a management shuffle, tapping Chairman Robert Willumstad to take over from Martin Sullivan, who had been chief since 2005. The company is also seeking a new chief financial officer.(Reporting by Lilla Zuill, editing by Richard Chang)
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