American International Group said it will delay the reporting ofits third-quarter results and restate earnings going back to 2001,while estimating its recent catastrophe losses would amount to $1.6billion.

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The New York-based insurer said it plans to file itsthird-quarter 10-Q financial report with the Securities andExchange Commission Nov. 14 and hold a conference call thefollowing morning.

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AIG said the delay will allow the company to incorporate"corrections to certain errors," most of which were found inprevious audits.

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Those audits were undertaken after New York Attorney GeneralEliot Spitzer began an investigation that focused on companyaccounting activity and led to a civil action accusing the companyof fraud. AIG is currently in settlement talks with the attorneygeneral.

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AIG delayed the filing of its 2004 10-K report three timesearlier this year. In that report the company restated earnings andadded $850 million to its loss reserve for asbestos andenvironmental liabilities. The company also restated earnings goingback to 2000 at that time.

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In addition to its alleged involvement with brokers inbid-rigging and steering, Mr. Spitzer and the SEC have examinedAIG's use of finite reinsurance, which the SEC said was used tosmooth earnings at other companies by disguising a loan as aninsurance transaction.

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AIG said the most significant errors causing this restatementrelate to the accounting of derivatives. The errors are expected toadd $500 million to earnings, the company said.

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Because of the correction, AIG would restate its earningsstatements going back to 2002, selected financial data in 2001 and2000. Quarterly information for 2004 and the first two quarters of2005 would also be affected.

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The carrier said it estimates adjusted net income for the thirdquarter will be $1.8 billion, and $8.3 billion for the nine monthsending Sept. 30.

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Catastrophe losses will come in at $1.6 billion after tax andnet of reinsurance recoverables.

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The company cautioned that the catastrophe loss estimate couldchange due to a number of factors stemming from the unprecedentednature of Hurricane Katrina and other uncertainties.

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In an investor's note, William Wilt at Morgan Stanley & Co.called AIG's action "a surprise," but added that while there couldbe some losses in the stock price, overall the company enjoys"considerable advantages" in the market place.

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Late today, Standard & Poor's said it would take no ratingaction against AIG over the delay. The rating agency said thecarrier can easily handle the catastrophe loss and that there wouldbe little effect on shareholder's equity on earnings as the companyindicated.

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