Will AIG Post A Huge Loss?

Not many of the insurers that already have reported their fourth quarter and year-end results in recent weeks seem to have faced as much speculation leading up to their report as American International Group Inc.

Reuters today released a story examining the possibility that the bailed-out insurer may possibly post another multi-billion dollar loss when it releases its Q4 earnings report later today after the market closes. The report says that AIG could be looking at its ninth quarterly loss in the past three years. Since the bailout, the beleaguered insurer has lost more than $75 billion.

The biggest issue upon which the quarter hinges, Reuters reports, is the performance of AIG's two major subsidiaries: Chartis Inc. and SunAmerica.

Two weeks ago, AIG announced its intention to raise the loss reserves for its Chartis property/casualty business. Following completion of AIG's annual comprehensive loss reserve review, the insurer plans to book a $4.1 billion charge—net of $446 million in discount and loss sensitive business premium adjustments—for Q4 2010 to bolster the reserves. That $4.1 billion is expected to cover higher-than-expected losses on past claims, mostly related to asbestos and other exposures.

Some good news, however, came late last month when the U.S. Government Accountability Office (GAO) noted in its TARP report that AIG's shareholder equity had rebounded to $80.8 billion in the third quarter of 2010. The GAO was bullish about the insurer's prospects after it had made its recapitalization efforts official the week prior.

Check back tomorrow for a full recap of AIG's Q4 results.

To see last week’s Q4 results recap from around the insurance industry, click here.

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