AIG profit falls 27pc
Friday, 9 November 2007
NEW YORK, Nov 8 (AP): The world's largest insurer may not have invested as much in mortgage-backed assets as the world's biggest banks, but American International Group Inc.'s exposure to the rocky credit and housing markets was enough to dampen its third-quarter profit.
Losses in AIG's investment portfolio, credit-swap portfolio and mortgage-insurance business added up to about $1.4 billion, and caused net income to fall by 27 per cent compared with last year's third quarter.
Back in August, AIG called exposure to subprime debt "minimal." On Wednesday, it maintained that despite some losses due to mortgage-backed bonds, its exposure to the debt remains "high quality," with "substantial protection."
But with asset quality so debatable right now, investors found little solace in the assurance. Also, AIG's life and retirement services segment saw a sizable decline, raising concerns about whether competition might force insurers to lower prices.
Shares fell US$1.70, or 2.90 per cent, to $56.20 in after-hours trading when the report was released. They had plunged almost 7.0 per cent to close at $57.90 in regular trading Wednesday.
AIG's $872.3 billion-investment portfolio lost $864 million, its credit-swap portfolio lost $352 million, and its mortgage-insurance business lost $215 million.
Those declines caused net income to fall to $3.09 billion, or $1.19 per share, in the July-September period, from $4.22 billion, or $1.61 per share, in the same period last year.
Losses in AIG's investment portfolio, credit-swap portfolio and mortgage-insurance business added up to about $1.4 billion, and caused net income to fall by 27 per cent compared with last year's third quarter.
Back in August, AIG called exposure to subprime debt "minimal." On Wednesday, it maintained that despite some losses due to mortgage-backed bonds, its exposure to the debt remains "high quality," with "substantial protection."
But with asset quality so debatable right now, investors found little solace in the assurance. Also, AIG's life and retirement services segment saw a sizable decline, raising concerns about whether competition might force insurers to lower prices.
Shares fell US$1.70, or 2.90 per cent, to $56.20 in after-hours trading when the report was released. They had plunged almost 7.0 per cent to close at $57.90 in regular trading Wednesday.
AIG's $872.3 billion-investment portfolio lost $864 million, its credit-swap portfolio lost $352 million, and its mortgage-insurance business lost $215 million.
Those declines caused net income to fall to $3.09 billion, or $1.19 per share, in the July-September period, from $4.22 billion, or $1.61 per share, in the same period last year.