iOS app Android app More

AIG Takes $4.1 Billion Charge In 4Q

Aig Charge

First Posted: 02/09/11 08:15 AM ET Updated: 05/25/11 07:30 PM ET

American International Group Inc will take a fourth-quarter charge of $4.1 billion for raising loss reserves at global property insurer Chartis, the insurer said on Wednesday.

Chief Executive Robert Benmosche decided to focus on Chartis and U.S. life insurer SunAmerica when he joined U.S. government bailed-out AIG in 2009, while he proceeded to sell off other assets.

AIG said the reserve strengthening -- a total of $4.6 billion, not including $446 million in discount and premium adjustments -- relates to accidents from 2005 and earlier.

Asbestos, excess casualty, excess workers' compensation and primary workers' compensation make up 80 percent of the total charge, the insurer said.

Separately, AIG said it entered an agreement with the U.S. Treasury that will allow it to keep $2 billion of the proceeds from selling its AIG Star Life Insurance Co and AIG Edison Life Insurance Co. AIG will use this money to bolster the capital in its Chartis units.

AIG will report full fourth-quarter results after the market closes on February 24. Through Tuesday, analysts on average had expected the company to report a profit of 61 cents a share, according to Thomson Reuters I/B/E/S.

The company and the U.S. Treasury are expected to sell at least $15 billion in stock in May.

(Reporting by Elinor Comlay; Editing by Lisa Von Ahn and Gerald E. McCormick)

Copyright 2010 Thomson Reuters. Click for Restrictions.


FOLLOW HUFFPOST BUSINESS
Subscribe to the HuffPost Money newsletter!
Filed by Ryan McCarthy  |