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You might deny that it has cost a dime of taxpayer money, but you'd be wrong. The initial $85 billion of taxpayer money went where? AIG doesn't have it. They paid £14.1 million LAST YEAR for their contract sponsoring Manchester United! They had to hold their hands out for $37.8 billion in a second bailout. Tell me again where the $85 billion went and how that didn't cost us? Deny all you want, but the facts are on the other side of the fence.

Wondering if the Marxists are planning to confiscate the trillions of dollars held as Life Insurance Reserves. If, in fact, they are still *real money*.

Does the FED Reserve report includ all the Employer Benefit GROUP LIFE INSURANCE? If those benefit programs are replaced or taken over by the Federal Government - what happens to the Life Insurance premiums/reserves?

http://www.federalreserve.gov/releases/z1/current/accessible/l117.htm

Yes, they do have it. The net worth on AIGs most recent quarterly statement fully covers the treasury's investment, after all debt, including of course that lent by the Fed which is senior to all of it. AIG has been in the black in balance sheet terms since last summer. The reason for the recovery is clear - it is a giant leveraged bond fund with a $380 billion bond portfolio (out of $840 billion in total assets), and bonds spent all of last year on an epic tear higher.

The US treasury owns $68 billion in AIG preferred stock, senior to its other preferred issues, and to the common. (Note that of an up to $30 billion total of the series F preferred approved for issue to the treasury, only $3 billion has been tapped). In the market as of Friday, the common had a value of $3 billion. The AFF series yields about 12%; the price is up to $14 from a low of $1.27 a share during the crisis, and $2 after the bailout. AIG has $70 billion in tangible book value as of its most recent quarterly sheet.

AIG has $400 billion of insurance float. Meaning, it receives the interest on that much capital without needing to pay to borrow it, between the time it earns premiums for insurance written and the time it pays out on future claims. There is every reason to expect that float will generate a continual earning power in the ten billion a year range. For example, in 2006 it earned $22 billion.

When corporate bonds were trading at 60-80 cents on the dollar to yield 10-15% on great depression level default fears, AIG was insolvent. But with corporate bonds trading near par to yield 5-6%, it is solvent, and will earn money to rise above the break even point already reached last year.

It may easily take 3-5 years to have a total workout and repayment to the treasury. But the treasury is already covered by assets fully worth what it put in to the company. Barring any new smash equal to the last in that time frame, the US treasury will get out whole.

What we see here, for the nth time, is the delusions of one entry accounting. A cash flow isn't a loss; buying a company's security with assets behind it, is not throwing the money away.

Where is went - it bought AIG preferred stock, $68 billion of it. Of the last round that had $30 billion authorized, only $3 billion was needed and used. The US treasury owns that preferred stock, and is receiving regular dividends on it, several billion per year. The company lost its previous capital of $95 billion in the smash, and this investment recapitalized it and allowed it to continue its operations. AIG owns $840 billion in total assets, including $440 billion in corporate bonds. It naturally also have other commitments against those assets, primarily insurance policies (life, property, etc) that will eventually pay out. But it earns the interest on those assets in the meantime, and it has more in total assets than it owes in such ways.

How much more? As of September of 2009, $71 billion more. Enough to cover the entire treasury investment. The common stock, which is junior to the treasury stuff, has a market value of $3 billion as of Friday.

AIG is solvent, and its valuable assets fully cover the investment the treasury made. Understand, at the lows of the whole market early in 2009, AIG was indeed underwater, and there was then a serious risk of eventual loss to the treasury. But AIGs main asset, corporate bonds, were on a tear all last year, and brought it back into the black.