AIG 'may need to raise capital to meet Dodd-Frank Act demands'

9 August 2010

American International Group (AIG) operations may be "materially and adversely" affected by the new legislation contained in the Dodd-Frank Act, the company has warned.

It stated that cash flows and credit ratings could be hit, while regulatory oversight of AIG may be granted to the Federal Reserve if the firm's potential failure is deemed to be a risk to US economic stability, reports Bloomberg.

The insurer said that it may have to limit its investments in private equity and hedge funds because of the new reforms, as well as possibly having to raise capital if stress tests find that AIG does not have enough money to absorb losses in adverse economic conditions.

AIG has recently reported a net loss of $2.7 billion for the second quarter of 2010, with the company citing a $3.3 billion non-cash goodwill impairment charge as the chief reason for the deficit.

By Claire Archer

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