AIG Posts $5.36 Billion 2Q Loss on Credit, Capital Market Problems

Thu. August 07, 2008; Posted: 05:29 AM

NEW YORK, Aug 07, 2008 (A. M. Best via COMTEX) -- AIG | Quote | Chart | News | PowerRating -- Credit-market problems and investment losses continued to haunt American International Group Inc., as the multiline insurer reported a second-quarter net loss of $5.36 billion, or $2.06 a share, compared with net income of $4.28 billion, or $1.64 a share, a year earlier.

AIG (NYSE: AIG | Quote | Chart | News | PowerRating) said its net loss for the first six months of the year totaled $13.16 billion, compared to net income of $8.41 billion a year ago.

"The continuation of the weak U.S. housing market and disruption in the credit markets, as well as global equity market volatility, had a substantial adverse effect on AIG's results in the second quarter," the company said.

AIG reported $4 billion in net realized capital losses for the second quarter, compared with $17 million in losses for the same period a year ago. The effects of capital markets unrealized market valuation losses on super senior credit default swaps totaled $3.6 billion.

For the second quarter, general insurance operating income before net realized capital gains or losses was $1.39 billion, a 54.3% drop from a year earlier. The decline was due to a $461 million drop in net investment income due to lower partnership and mutual fund income, and a $440 million increase in operating losses at United Guaranty Corp.

Operating income for life insurance and retirement services fell 10% to $2.61 billion.

The financial services segment reported a $5.88 billion operating loss, compared to operating income of $512 million a year ago.

American International Group currently has a Best's Financial Strength Rating of A+ (Superior).

(By David Pilla, international editor, BestWeek: David.Pilla@ambest.com)

For full details on American Internat Group (AIG) click here. American Internat Group (AIG) has Short Term PowerRatings of 8. Details on American Internat Group (AIG) Short Term PowerRatings is available at This Link.

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