NEW YORK: Insurer American International Group Inc, which is being sued by US regulators over an accounting scandal, said on Tuesday it had overstated net income for the past five years by US$3.9bil, or 10%.
Following an internal review, AIG finally released a thrice-delayed regulatory filing in which it also cut its net worth through the end of 2004 by US$2.26bil, or 2.7% less than an early May warning of a possible US$2.7bil reduction.
AIG, the world’s largest insurer by market value, said the US$3.9bil cut in net income for the five years through 2004 included an US$850mil increase in its asbestos and environmental reserves for the fourth quarter of 2004.
“There is both good and bad news,” said Michael Chren, senior portfolio manager at National City Investment Management Co, citing the eventual filing of AIG’s 10K annual report and less-than-expected reduction in net worth as positives.
The reserves were adjusted to reflect a new view that potentially more claims could hit the company as AIG increasingly takes into account the losses it has experienced.
The company said it would commission an independent actuarial review of loss reserves of its main property and casualty insurance operations. – Reuters
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