| AIG posts $8.9 billion quarterly net loss |
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26/02/2010 17:52 (715 Day 03:39 minutes ago) | |||||
The FINANCIAL -- American International Group Inc. reported a net loss for the fourth quarter of 2009.According to Reuters, AIG was hurt by charges related to asset divestments, an increase in commercial insurance loss reserves and an tax-related allowance.
The mortgage, credit and stock markets have all improved significantly since AIG 's government bailout in September 2008, but the company is still struggling to repay more than $90 billion in government support, The Wall Street Journal reports. As stock markets rallied, write-ups in its financial-products division and higher investment income helped the bottom line, but they couldn't veil the fact that AIG 's main insurance businesses have remained weak.
According to the same source, shares of the giant government-controlled insurer skidded 14% in premarket trade at $23.66. The stock, which hit an all-time low in March, has more than doubled in the past year on a split-adjusted basis.
The net loss of $8.87 billion, or $65.51 a share, narrowed from $61.7 billion, or a reverse-split adjusted $458.99, a year earlier when AIG posted the biggest loss in U.S. corporate history, the New York-based firm said today in a regulatory filing, Bloomberg reports. The operating loss, which excludes some investment results, was $53.23 a share, missing the $3.94 average estimate of three analysts surveyed by Bloomberg.
Chief Executive Officer Robert Benmosche, 65, appointed in August, must increase insurance profits to repay loans in AIG ’s $182.3 billion bailout, according to the same source. Benmosche, who has told staff that AIG was “too big,” is also divesting two of the company’s largest non-U.S. life insurance divisions to reduce the firm’s draw on a Federal Reserve credit line by $25 billion. “It’s extremely important to see the earnings stabilize somewhat,” said Robert Haines, analyst at credit research firm CreditSights Inc. in New York.
The fourth-quarter loss was due to billions of dollars in restructuring costs that AIG logged in the quarter, CNN Money reports. In December, AIG sold large stakes in Alico and AIA, two giant foreign life insurance businesses, to the U.S. government. In exchange for those transactions, the Federal Reserve reduced the amount AIG has to repay taxpayers by $25 billion. AIG said it took a $5.2 billion charge for that sale last quarter.
The company also took a $2.8 billion loss after selling off Hong Kong-based life insurance company Nan Shan, and a $2.3 billion hit for increasing its loss reserve, according to the same source. AIG said the moves stabilized its insurance businesses and will help it pay back its debt to the U.S. government. The insurer received a bailout worth up to $181 billion from the Fed and the Treasury beginning in the fall of 2008.
AIG is in talks to sell its American Life Insurance Co unit to MetLife Inc (MET.N), but that deal has been delayed over a tax matter, Reuters reports. AIG is also moving ahead with a massive initial public offering of American International Assurance, its Asian life insurance business.
Separately, a source familiar with the situation said AIG has decided not to use securitized U.S. life insurance policies to pay down a Federal Reserve Bank of New York credit facility, according to the same source.
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