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AIG posts $8.9 bln loss, warns may need more aid
NEW YORK - American International Group Inc reported a quarterly loss of $8.9 billion on Friday and warned that it may need additional U.S. government support, even as it tries to pay back taxpayers after a $182.3 billion bailout.
AIG shares fell 14 percent in premarket trading.
The insurer said in a filing with the Securities and Exchange Commission that without additional government support, “in the future there could exist substantial doubt about AIG’s ability to continue as a going concern.”
AIG, which is nearly 80 percent-owned by the government, reported an adjusted loss of $7.2 billion, or $53.23 per share, compared with an adjusted loss of $38.5 billion, or $287.69 per share, a year earlier.
The net loss includes $6.2 billion related to paying back the Federal Reserve Bank of New York, $2.8 billion on the pending sale of Nan Shan Life Insurance Co, $2.3 billion in increased commercial insurance reserves, and a $2.7 billion valuation allowance charge for tax benefits not presently recognizable.
Looking ahead, AIG said it expects both property and casualty market pricing to continue to decline this year. It expects modest premium growth in 2010, driven by foreign general insurance.
In domestic life insurance, AIG expects sales and deposits to gradually recover in 2010-2011, while sales of foreign life investment-oriented products will continue to be lower than historic levels due to the lingering negative effects of AIG events on third party distribution networks.
Chief Executive Robert Benmosche has said he envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core.
AIG is in talks to sell its American Life Insurance Co unit to MetLife Inc, but that deal has been delayed over a tax matter.
AIG is also moving ahead with a massive initial public offering of American International Assurance, its Asian life insurance business.
Separately, AIG has decided not to use securitized U.S. life insurance policies to pay down its New York Fed credit facility.
“We think the combination of strategic asset sales and reviving businesses will generate sufficient funds to repay the taxpayer, mooting the need to pursue the previously contemplated life insurance securitization,” AIG spokesman Mark Herr said.
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