American International Group said today that the process of restating its 2004 finances on a generally accepted accounting basis has delayed its ability to supply state regulators with a combined statutory report requiring more conservative accounting.
Last May, after delaying it three times, AIG submitted an annual report to the SEC with a five-year GAAP restatement that reduced profits for that period by 10 percent.
The company–which has been sued by the New York Attorney General's Office for civil fraud and is reported to be considering a $1.5 billion settlement–admitted then that its listing of some transactions was "improper."
Meanwhile, its 2004 combined statutory report to the National Association of Insurance Commissioners, which details the combined activities of all the giant company's various insurance entities, remains lacking.
"Preparation of the report is still ongoing," said AIG spokesman Christian Murray, who could not say when it will eventually be filed.
Mr. Murray noted that the more than 30 companies within AIG had all filed their individual reports with regulators. The combined report, however, can give a quite different picture of the entire operation.
In 2003, for example, totaling the assets listed for all the individual AIG companies resulted in a figure of $80.3 billion, but the combined report–which eliminates double-counting of inter-company ownership of equity holdings and other transactions–reduced AIG total assets by $10.1 billion to $70.1 billion.
Combined filers, unlike the individual companies they contain, do not have a state of domicile and therefore are not answerable to state regulators who have the power to levy fines on companies within their jurisdiction.
The combined filings are fed into the NAIC database for statistical use and for analysis.
Unlike their GAAP filing–in which New York-based AIG shows stockholders the continuous growth value of their portfolios–the statutory filing provides proof that policyholders' claims can be satisfied and that capital surplus and reserves are healthy for the life of policies.
Under statutory accounting, insurers must report the entire underwriting expense when a policy is issued, whereas under less conservative GAAP accounting, a deferred cost treatment is allowed.
The National Association of Insurance Commissioners did not immediately respond to a request for comment on AIG's late filing situation.
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