AIG booted out of the Dow
Two days after dramatic government rescue, insurer will be replaced on leading stock index by foodmaker Kraft.
NEW YORK (CNNMoney.com) -- Big Insurance is out. Big Food is in.
American International Group, the beleaguered insurance giant, will no longer be a part of the Dow Jones industrial average starting next week.
The move, which will take effect on Sept. 22, comes just two days after the Federal Reserve said it would lend as much as $85 billion to rescue the crumbling insurer.
Fearing a bankruptcy by the insurer and an ensuing global financial crisis, federal regulators threw AIG a lifeline late Tuesday.
Like many of its Wall Street peers, AIG bet big on the on the subprime mortgage market and subsequently got burned. Over the past three quarters, the New York City-based company has lost more than $18 billion.
In that regard, Thursday's decision by Dow Jones to remove AIG makes sense. While the 29 other index components have suffered alongside the insurer, AIG has helped dragged the Dow further into bear territory.
The last change to the index was made in February when Bank of America (BAC, Fortune 500) and oil giant Chevron (CVX, Fortune 500) replaced Altria Group (MO, Fortune 500) and Honeywell International (HON, Fortune 500).