AIG reports US$99 billion loss in 2008, announces restructuring plan

American International Group (AIG) Inc. has reported a US$99.3-billion net loss for 2008, compared to a net income of US$6.2 billion in 2007.
Its general insurance operations reported net premiums written of US$9.2 billion in 2008 Q4, a 16.3% decline compared to 2007 Q4.
The company has since announced a set of initiatives in conjunction with the U.S. Department of Treasury and the Federal Reserve to improve its capital structure, protect and enhance the value of its key businesses and position its franchises as more independently run, transparent companies.
As part of the “broad set of actions,” AIG intends to form a general insurance holding company, including its commercial insurance, foreign general unit and other property and casualty operations to be called AIU Holdings Inc.
The new entity will have a board of directors, management team and brand distinct from AIG.
The establishment of AIU Holdings Inc. is intended to assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions, an AIG statement says.
Global economic conditions have continued to deteriorate since Sept. 2008, posing challenges to AIG’s ability to divest assets at acceptable values, the statement continues.
“As a result, AIG is redirecting the divestiture process away from relying solely on immediate sales for cash and will use a greater variety of tools to maximize the value of individual businesses,” said Paula Rosput Reynolds, AIG vice chairman and head of restructuring.
“The U.S. Treasury, the Federal Reserve and AIG have taken actions that will allow AIG to achieve a complete restructuring over the next several years through a process that protects policyholders, continues to reduce risk, and produces strong, focused franchises that can operate as independent entities,” she added.