AIG Will Absorb $5 Billion in Losses From Securities Lending Unit

AIG plans to absorb $5 billion in losses for a dozen insurance units after their securities-lending accounts suffered $13 billion of write-downs related to subprime-mortgage exposure.    AIG will also inject an undisclosed amount of capital into some of the subsidiaries.  Investors, in general, never want to see the words "undisclosed amount of capital" in a press release.  An "undisclosed amount of capital" usually means that the amount is so large that the company is terrified of having that number plastered all over the front page of the Wall Street Journal.  Incidentally, does anyone else remember that AIG predicted in March that the worst-case scenario for losses from these "temporary write-downs" was $900 million taken over a period of years?  Or that it was merely $2.4 billion in May?  In my post about AIG's earnings release in May, I made an offhanded comment about how the company would be in serious trouble if its estimates for losses continue to double every month.  Here we are a month later with the company absorbing actual losses of $5 billion.  How much worse can it get given that the company has a $550 billion CDS portfolio?  I'm not sure investors want to wait around to find out.