Fallout from the decline in private equity deals and big losses at hedge funds continue to spill over into the earnings of large publicly traded companies that had turned to the assets class to boost results. The latest victim, American International Group Inc., which an analyst predicts will see the value of its private equity and hedge fund investments evaporate.
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Bloomberg
is reporting
that AIG's "earning from so-called alternative holdings were probably
close to zero in the second quarter, after soaring 77% to $1.02 billion
a year earlier, said Citigroup Inc. analyst Joshua Shanker."
The news service said that insurers increased their private equity and
hedge fund assets by 48% to $49.8 billion in 2007, according to the
National Association of Insurance Commissioners. But the credit crunch
has cut off the once lucrative flow of money to insurers.
- George White
See Bloomberg story
