AIG, the giant insurer bailed out by the federal government, reported a quarterly loss of $8.9 billion on Friday, hurt by charges related to U.S. loan payback, asset divestments and higher loss reserves.
AIG, in a regulatory filing, warned that it may need additional government support, as it did last fall. But it also said it will have adequate liquidity to "finance and operate AIG’s businesses and continue as a going concern for at least the next twelve months."
AIG shares were down 8.4 percent in premarket trading.
AIG, which is nearly 80 percent-owned by the government, reported an adjusted loss of $7.2 billion, or $53.23 per share, compared with an adjusted loss of $38.5 billion, or $287.69 per share, a year earlier.
Analysts had been expecting a loss of $3.94 per share. It was not immediately clear whether the results were comparable with the estimates, according to Thomson Reuters I/B/E/S.
The net loss includes $6.2 billion related to paying back the Federal Reserve Bank of New York, $2.8 billion on the pending sale of Nan Shan Life Insurance Co., $2.3 billion in increased commercial insurance reserves, and a $2.7 billion valuation allowance charge for tax benefits not presently recognizable.
"The numbers are so hard to normalize that it’s difficult to know what the final business looks like," said Thomas Russo, partner and portfolio manager at Gardner Russo & Gardner.
Looking ahead, AIG said it expects both property and casualty market pricing to continue to decline this year. It expects modest premium growth in 2010, driven by foreign general insurance.
In domestic life insurance, AIG expects sales and deposits to gradually recover in 2010-2011, while sales of foreign life investment-oriented products will continue to be lower than historic levels due to the lingering negative effects of AIG events on third party distribution networks.
Chief Executive Robert Benmosche has said he envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core.
AIG is in talks to sell its American Life Insurance Co. unit to MetLife Inc., but that deal has been delayed over a tax matter.
AIG is also moving ahead with a massive initial public offering of American International Assurance, its Asian life insurance business.
AIG has decided not to use securitized U.S. life insurance policies to pay down its New York Fed credit facility.
"We think the combination of strategic asset sales and reviving businesses will generate sufficient funds to repay the taxpayer, mooting the need to pursue the previously contemplated life insurance securitization," AIG spokesman Mark Herr said.
