- The Washington Times - Monday, November 10, 2008

CHARLOTTE, N.C. (AP) – American International Group Inc., once the world’s largest insurer, said Monday that continued financial market turmoil resulted in a large third-quarter loss.

The results come as the U.S. government also Monday announced a restructuring of a bailout plan for the troubled insurer, boosting aid to the company to around $150 billion.

New York-based AIG said it lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter 2007.

“No one really knew what the losses were going to be, everyone knew that they were going to be horrible,” said CreditSights analyst Rob Haines.

And even with the additional help from the Federal Reserve and the Treasury Department, “AIG is still a troubled company,” he said.

The latest results include $7.05 billion in unrealized losses at AIG Financial Products, the source of credit-default swaps, and pre-tax losses of $18.31 billion tied to the declining value of AIG’s investment portfolio.

AIG’s general insurance business swung to a loss on $1.39 billion in catastrophe losses, primarily related to hurricanes Gustav and Ike, falling investment income and increased losses at United Guaranty Corp.

General insurance net premiums dipped nearly 1 percent to $11.73 billion, while total net premiums earned edged up 2.6 percent to $11.73 billion.

Life-insurance and retirement-services profits were more than halved by weak partnership and mutual-fund results.

Adjusted to exclude certain items, operating losses totaled $9.24 billion, or $3.42 per share, versus a profit of $3.49 billion, or $1.35 per share, last year.

The results fell short of estimates. Analysts surveyed by Thomson Reuters, on average, forecast a loss estimate of 90 cents per share on revenue of $18 billion.

“Reported earnings are not indicative of the underlying core earnings power of our insurance businesses, which remain solidly capitalized,” said AIG President and Chief Executive Edward Liddy in a statement. “Retention of our customers remains strong and reflects the support and loyalty of our long-term partners, intermediaries and sponsors.”

The government’s new financial assistance to AIG includes pouring $40 billion into the company in return for partial ownership. The Federal Reserve said in September it would loan a total of $123 billion to AIG to help rescue the ailing insurer.

The action Monday was taken as it became increasingly clear that the original financial lifeline thrown to AIG would not be sufficient to stabilize the teetering company.

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