September 16, 2008
• Second rocky day on Wall Street
• Insurance giant failing
• Experts urge calm
Shares of international insurance provider American International Group or AIG dropped below $3 in Wall Street trading Tuesday morning after a high earlier this year of more than $60 a share, according to the MSN.com Money Page. Company dispatches said AIG must raise $75 billion dollars in capital to avoid bankruptcy.
"AIG being the largest insurer in the world, this would be to my knowledge the largest failure of an insurance provider," UAB assistant professor of business Andreas Rauterkus, Ph.D., said.
AIG could be the second Wall Street giant to declare bankruptcy this week after investment bank Lehman Brothers folded Monday. Another of the country's top five investment banks, Merrill Lynch, sidestepped bankruptcy with the sale of its company to Bank of America Monday.
"This [an AIG bankruptcy] would be another major blow to the financial markets, much bigger than Lehman Brothers, and we could very easily see a ripple effect that pulls other companies down as well," Rauterkus said.
For insurer AIG's millions of worldwide customers, news of its failing should not cause an immediate panic.
"From what I heard and read, the insurance divisions of AIG are safe and backed up, so customers shouldn't have to worry about their insurance," Rauterkus said.