AIG Profits Skid on Housing Losses

AIG late Wednesday said third-quarter earnings fell to $3.09B ($1.19/sh.) from $4.22B ($1.61/sh.) a year ago while adjusted earning dropped to $3.49B ($1.35/sh.) from $4.02B ($1.53/sh) as profits were impacted by losses in the US housing market and the credit crisis. Revenue was $29.84B vs $29.25 in the year-ago period. Analysts, on average, had expected earnings of $1.62/sh. on revenue of $29.91B. Shares slid 6.7% in composite trading Wednesday leading up to the earnings release. The world's largest insurer said results were impacted by the US residential mortgage and credit market conditions but that exposure was contained by the company's risk management processes. The company's $872.3B investment portfolio lost $864M, while its credit-swap portfolio lost $352M and its mortgage-insurance business $215M. AIG had said in August its exposure to subprime debt was "minimal." "Despite the volatility of the recent quarter, AIG's exposure to the residential mortgage-backed securities market within the investment portfolios remains high quality and with substantial protection through collateral subordination," CEO Martin Sullivan said Wednesday. The mortgage-insurance unit paid out $445M in claims, more than four times the $91M it paid out a year earlier. The delinquency rate at its lending business climbed to 2.22% from 1.59%. Analysts speculated that the disappointing performance could bolster support for former CEO Hank Greenberg, who is trying to shake up the company. "Greenberg's going to use everything he can to leverage his position. He's always been good at that," one analyst said.

Sources: Press release, Financial Times, AP, Bloomberg
Commentary: Former AIG Chief Turns Up the Heat • The Imminent Death of the Insurance Industry
Stocks to watch: AIG. Competitors: AZ, AXA. ETFs: IAK, KIE

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Comments

[WAKEUP]

Beware The Green(berg) Menace! He's stalking, stalking, stalking AIG, again. He wants to get back into the leadership (or Shadow version thereof) position at AIG, so that he can complete his evil schemes, only narrowly averted by his dismissal from the throne. He will suck the bone marrow out of AIG's financial body, if he is allowed to get even the tip of his giant vacuum inside the company.

[User 89279]

Please add AIG and UBS to my list of stocks to be followed