American International Group Inc

The contracts were flying out of AIG Financial Products. Hardly anyone outside Wall Street had ever heard of credit-default swaps, but by early 2005 investment banks were snapping them up to insure all kinds of deals in case of default, fueling one of the great financial booms in U.S. history. During twice-monthly conference calls that originated from the company's headquarters in Wilton, Conn.

When insurance giant American International Group Inc. imploded last fall, the firm's problems were quickly blamed not on its core insurance business but on an obscure operation that traded exotic mortgage securities. But as the economic crisis deepens, it has become clear that AIG's problems extend across most of its business lines, including its massive life insurance and retirement services operations, which reported a staggering $18-billion quarterly loss this month.

The furor over American International Group Inc.'s million-dollar payouts to employees who nearly toppled the insurance giant is turning a spotlight on what critics say is frequently an abuse in the way corporate executives are paid. AIG is shelling out $450 million in so-called retention bonuses. Such payouts have been used for years to keep coveted employees from jumping ship during periods of corporate upheaval, typically caused by a merger or bankruptcy.

The firestorm over American International Group is spreading beyond executive bonuses, with lawmakers and policy experts now questioning virtually all aspects of the taxpayer-financed rescue package for the insurance giant. Among other issues, critics are asking why AIG was allowed to use federal bailout money to repay $13 billion in debt obligations to Wall Street powerhouse Goldman Sachs, as well as debts to foreign banks.

American International Group Inc., the largest U.S. insurer, lost more than $5 billion in the fourth quarter as bad credit ate into its investments, the company said Thursday. AIG has been thrust to the forefront of the credit crisis that is gripping financial markets because of contracts known as credit default swaps. These swaps pledge to cover missed payments on $579 billion in debt. AIG's swap portfolio lost $11.

How far will the bailout binge go? So far this year, the federal government has put up nearly $30 billion to avert a major financial default by the investment bank Bear Stearns Cos.; committed to investing as much as $200 billion in preferred stock of the loss-plagued finance giants Fannie Mae and Freddie Mac and at least $5 billion in their mortgage securities; and agreed to provide an emergency loan of $85 billion to American International Group Inc.

Bargain hunters could snag some good deals by buying parts of troubled American International Group Inc.'s profitable subsidiaries in California and around the world, market analysts predicted Wednesday. Top-earning units that could be up for grabs in the state include 21st Century Insurance Co. of Woodland Hills, the state's seventh-largest automobile insurer, and International Lease Finance Corp. of Century City, which owns more than 950 commercial airliners. AIG also is the No.

Dismissing rumors of a sale of troubled American International Group Inc.'s cargo terminal operations at several U.S. seaports, the head of the group that manages those facilities said Thursday that they were insulated from AIG's financial troubles and wouldn't be put on the auction block. "We are legally and financially separate," said Stephen Edwards, chief executive of Iselin, N.J.-based Ports America Group, which is owned by the private equity firm AIG Highstar Capital.

American International Group Inc. investors trying to derail a U.S. takeover of the insurer might demand a shareholder vote on the $85-billion deal, a person familiar with the situation said. The investors decided at a New York meeting Monday to ask AIG for data so they could raise money and keep the federal government from taking a 79.9% stake, said the person, who declined to be identified because talks were private.