Sun, Feb 28, 2010 - Page 11 News List

AIG narrows quarterly loss


New York-based American International Group Inc (AIG) said on Friday it lost US$8.87 billion in the fourth quarter as its general insurance business remained weak and the company ran up expenses from paying back government loans.

The troubled insurer also said in an annual regulatory filing that it may need additional support from the government.

However, AIG has included such warnings in past filings with the Securities and Exchange Commission.

The fourth-quarter results were an improvement from the US$61.7 billion AIG lost in the year ago period, but they were worse than analysts expected. They also followed two straight profitable quarters.

The company reported a 2.2 percent drop in new premiums in its Chartis general insurance business, compared with a year earlier.

AIG attributed the slide in part to the weak economy. It also had lower sales of life insurance products, and it added US$2.3 billion to its reserves against losses in its commercial insurance business.

AIG also reported US$6.2 billion in expenses from repaying government loans.

It also said it lost US$65.51 per share in the last three months of last year. The compares to a loss of US$458.99 per share in the fourth quarter of 2008.

On average, analysts surveyed by Thomson Reuters forecast a quarterly loss of US$3.94 per share.

AIG was bailed out in September 2008 by the government as the financial crisis spiraled out of control.

The insurer has received aid packages with a total value of US$182.5 billion from the government. In return for that financial support, the government received an 80 percent stake in AIG.

Since receiving government bailout funds, AIG has completed 19 unit sales or asset transactions in an effort to repay government debt.

It reported on Friday that it continues to unwind its Financial Products Group, the unit blamed for AIG’s downfall.

“Clearly we will be a smaller and more focused company than in the past,” CEO Robert Benmosche said in a prerecorded message. “The only way we can repay taxpayers is to divest parts of this organization.”

Earlier this month, MetLife Inc confirmed that it is in talks with AIG to buy one of AIG’s insurance units. Media reports price the deal at as much as US$15 billion.

The two companies have been in discussions for months about a potential deal for AIG’s American Life Insurance Co, known as Alico.

Alico is an international life and health insurance business that operates in more than 50 countries.

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