Monday, September 16, 2013

September 16: AIG Insurance Gets Bailout, Forced to Sell Building

AIG Insurance building
AIG Insurance, once the world's largest insurer, nearly collapsed in September 2008 under losses from bad mortgage bets made by a financial products unit. The U.S. government has since stepped in with up to $180 billion in financial support. On September 16, 2008, AIG Insurance avoided bankruptcy thanks to an $85 billion bailout by the United States government which gave the government a 79.9 percent stake in the insurer.

One condition of this bailout was that AIG would sell their building at 70 Pine Street to raise capital. The building was valued at $330M but they could not find a buyer. In desperation, they sold it for $150M (half of the asking price) to a Korean based investment bank called Kumho in August 2009.

To put that sale into perspective, in December 2011, a Russian billionaire paid $88 million for a 4-bedroom penthouse on Central Park West. Just think: for a measly $62M more, the Russian family could have bought an entire building downtown.

For more information about Wall Street and New York's Financial District, join a Wall Street Walks guided walking tour!