American International Group (NYSE:AIG) swung to a loss in the third quarter, as its restructuring charges took a heavy toll on the bailed-out insurance giant.
The insurer is still in the midst of repaying more than $100 billion outstanding on the loans it borrowed from the US government two years ago through sales of its assets.
For the third quarter, the company reported a net loss of $2.4 billion, or $17.62 per diluted common share, compared to net income of $455 million, or $0.68 per share, in the prior year quarter.
Restructuring-related charges had an impact of $4.5 billion, including a $1.9 billion loss on the pending sale of American General Finance (NYSEARCA:AGF), its consumer credit business.
The company made an adjusted net loss of $200 million during the third quarter.
Despite the low-interest rate environment, AIG's continuing insurance operations remained stable, earning pre-tax income of $2.1 billion in the period from Chartis and SunAmerica Financial Group, compared with $1.9 billion in the third quarter of 2009.
"We continue to focus on maintaining financial strength and underwriting discipline, improving efficiency and transparency, and better balancing risk and return," said AIG president and CEO Robert H. Benmosche.
In September, AIG announced a repayment plan involving three components, which included repaying and thus terminating the $20 billion Federal Reserve credit facility, facilitating the U.S. government's eventual exit in two AIG-related special purpose vehicles totaling approximately $26 billion, and exchanging the U.S. Treasury's holdings in preferred shares for AIG common stock.
The funds for the deal were raised from the insurer's sale of its assets, including the IPO of its Asian life insurance business American International Assurance (NYSEARCA:AIA) in October, and the $15.5 billion sale of its foreign life insurance company American Life Insurance Company (ALICO) to Metlife, which closed in November.
The company said it expects to close the sale of AGF later this year, and the sale of Japan-based life insurance businesses AIG Star and AIG Edison early next year.
At September 30, 2010, total equity was $108.7 billion, an 11% rise from $98.1 billion at December 31, 2009.
The company was down 0.7% to $44.43 as of 10:56am ET on Friday. Its shares have gone up 14% since AIG announced its repayment plans in late September.
Disclosure: no position