AIG announced two bad pieces of news but each was framed as good.
The insurance company which has benefited from a $180 billion US bailout reported a net loss attributable to AIG common shareholders of $8.9 billion for the fourth quarter of 2009, or $65.51 per diluted common share. Last year in the same period AIG a net loss of $61.7 billion or $458.99 per diluted share . The number is believed to be the largest single quarterly loss in American corporate history, so the improved results are relative but still spectacularly poor. Insurance division losses were the primary culprit during the latest period.
In addition to the poor earnings, AIG said it has decided not to use securitized U.S. life insurance policies to repay the U.S. government. Several media sources said a plan to give the Federal Reserve Bank of New York securitization notes of up to $8.5 billion representing embedded value of certain of its U.S. life insurance businesses to pay down its loan has been abandoned. This may help the firm’s balance sheet but it is a slap at taxpayers.
AIG President and Chief Executive Officer Robert H. Benmosche said, “Our team made great progress during the year in executing our strategic restructuring plan, by stabilizing and strengthening AIG’s insurance businesses, reducing AIG Financial Products Corp. (AIGFP) exposures, and positioning certain businesses for sale.” He is a man who likes to talk first and think later. This is no exception.
Douglas A. McIntyre
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