The credit crunch hit American International Group Inc. with brute force, as the global insurer reported a $5.3 billion fourth-quarter loss largely because of a write-down that exceeded many analysts' expectations. It was by far the worst quarterly loss the company has reported in its history, which dates back to 1919.
That write-down came on derivatives linked in part to subprime mortgages that the New York firm said fell in value by $11.12 billion, pretax, in the fourth quarter. It left open the possibility that actual losses on the portfolio could be "material" in some future reporting period.
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Read about how shares of the world's biggest insurer sank after it reported its largest-ever loss, with the added warning that further write-downs were possible.