AIG posts $8.9 bn loss on loan repay, reserves

Agencies
New York, Feb 27:
American International Group Inc reported a quarterly loss of $8.9 billion, hurt by loss reserves and efforts to repay the US government, as it struggles to find its feet more than a year after its $182.3 billion rescue.
AIG's general insurance unit, Chartis, and domestic life insurance and retirement services, SunAmerica Financial Group, showed improvement. But the market remained skeptical, and AIG shares fell 9.3 percent to $24.95 in Friday afternoon trading on the New York Stock Exchange.
"It could have been a better result," said Bill Bergman, a senior analyst at Morningstar. "We have seen improvement in housing finance and credit markets in ways that AIG might have benefited to a greater extent than what we saw today."
The loss shows the U.S. government, which owns nearly 80 percent of the insurer, still has a long wait before it gets back its direct investment in AIG, which includes about $25 billion outstanding under a Federal Reserve Bank of New York credit facility and roughly $45 billion in equity.
AIG reported a fourth-quarter 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.
Analysts had been expecting a loss of $3.94 per share. It was not immediately clear whether the results were comparable with the estimates, according to Thomson Reuters.
The net loss includes $6.2 billion related to paying back the New York Fed, $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.
Bergman said the increase in its loss reserves made AIG an outlier in the industry. "The fact that AIG is taking bigger hits on its underwriting is a little cause for pause," he said.
Chief Executive Robert Benmosche, who envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core, struck a hopeful note.
"While we are not out of the woods by any stretch, these numbers represent a substantial improvement from just one year ago," Benmosche said in a recorded message on Friday.
AIG also said Dennis Dammerman, who led the search for a new CEO last year that resulted in Benmosche's hiring, will resign from the board on Feb 28 for health-related reasons.
Separately, the New York Fed named Peter Langerman, CEO of the Mutual Series fund group of Franklin Templeton Investments, to the AIG Credit Facility Trust, replacing Douglas Foshee.