AIG Reports $223 Million In Charges

AIG Reports $223 Million In Charges

NU Online News Service, Feb. 2, 10:35 a.m. EST?American International Group Inc., in advance of its fourth-quarter earnings report, said it will record $223.5 million in after-tax charges to cover a legal settlement and natural disaster losses.[@@]

The breakdown of charges is $126.9 million, or five cents per share, in connection with late reported losses from third-quarter hurricanes and typhoons.

AIG said the charge resulted not only from the magnitude of damage after a rapid succession of storms, but shortages in labor and materials required for an efficient and timely rebuilding effort in Florida and other impacted areas.

The company in the third quarter had reported $512.2 million in net after-tax catastrophe losses from hurricanes and typhoons.

AIG said the South Asian earthquake and tsunamis will result in a $43.6 million, or two cents per share charge.

A settlement with the Securities and Exchange Commission, the United States Department of Justice and the United States Attorney for the Southern District of Indiana in Indianapolis, that was first announced Nov. 30, will cost the company $53 million, or two cents per share, AIG said.

The payout will settle actions that began after AIG was accused of helping Brightpoint Inc. improperly smooth out its balance sheet through financial engineering that involved "non-traditional" insurance arrangements.

In reaction to the AIG announcement, Banc of America Securities said it was lowering its fourth quarter earnings estimate for the company by eight cents to $1.13 from $1.21.

Banc America said it is continuing a buy rating for AIG and its 12 month target for the company shares, which closed yesterday at $66.74, is $74.

The analysts said they expect AIG to benefit from strong investment returns and that underlying earnings fundamentals and visibility remain very strong, positioning the company to outperform competition in the property-casualty sector.

AIG is due to release its fourth-quarter and 2004 earnings next Wednesday, when AIG Chairman Maurice R. Greenberg will host a conference call for investors at 9 a.m. EST that also will be broadcast live over the Internet. The audio Webcast of the conference call can be accessed at www.aigwebcast.com

AIG's common stock is listed in the U.S. on the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Story updated 11:31 a.m.