AIG...LOL! 17:48:28 Today AIG =WSJ UPDATE: AIG Posts Lowest Loss In Six Qtr
By Liam Pleven and Lauren Pollock Of THE WALL STREET JOURNAL
American International Group Inc. (AIG) posted its lowest loss in six quarters, reporting a $4.4 billion deficit that reflected ongoing hits to its investments and stiff challenges facing its insurance companies. Leading up to Thursday, AIG had posted five consecutive quarterly losses totaling more than $100 billion since its last profitable period, the third quarter of 2007. Each one of those five prior losses had topped $5 billion, with the largest, nearly $62 billion, coming in the fourth quarter of last year.
The latest results included $1.9 billion in charges tied to the wind down of the Financial Products group, whose problems pushed the company to the brink of bankruptcy, and $2.5 billion in investment losses. Operating income at AIG's general-insurance business dropped by 72% amid investment losses, while life-insurance and retirement-services profits dropped to $1.2 billion amid lower assets under management and losses on partnership investments.
The government rescued AIG last September, and has committed up to $173.3 billion to the bailout. Taxpayers got a nearly 80% stake in the company in exchange.
(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)
AIG blamed some of the first-quarter results on negative publicity surrounding the company. In particular, AIG said that had an impact on net premiums for its U.S. commercial insurance business, which declined 18.3% from the same period a year ago.
The company also cited negative publicity in discussing the results of its life insurance and retirement services operations, where it said total premiums, deposits and other considerations fell 43% from the first quarter of 2008.
The spotlight got especially hot for the company in mid-March, near the end of the quarter, when criticism erupted over AIG's plan to pay bonuses to employees at the financial products unit. In a statement accompanying the results, Edward Liddy - the chief executive installed by the government in September - said AIG was moving to position its insurance units "as discrete businesses" and had wrapped up sales of some units. "Several other transactions are under discussion," Liddy added.
In a separate filing with the Securities & Exchange Commission, AIG said it expects to generate net cash of $2 billion from six asset sales it has closed so far in 2009 and a seventh - the sale of its car insurance business to a rival - that it expects to wrap up in the third quarter. As of late last month, AIG had borrowed nearly $45 billion from the Federal Reserve Bank of New York as part of the bailout.
-By Liam Pleven, The Wall Street Journal; liam.pleven@wsj.com
-By Lauren Pollock, Dow Jones Newswires; lauren.pollock@dowjones.com
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