Insurer AIG posts loss on $15m write-down

Insurer AIG said a $15 million (£7.67 million) write-down in its first quarter was "beyond its expectations".

AIG, the world's largest insurer by assets, said the losses were related to exposure to the US residential housing, credit and capital markets.

"While we anticipated a difficult trading environment, the severity of the unrealised valuation losses and decline in value of our investments were beyond our expectations," AIG president and chief executive Martin Sullivan said.

The write-downs led to a net loss for the quarter of $7.81 billion (£4 billion), or $3.09 (£1.58) per diluted share.

As a result of the loss, US-based AIG announced a plan to raise approximately $12.5 billion (£6.4 billion) in capital through a stock offer to improve its balance sheet.

The loss was due to the company's investment divisions.

Financial Services reported an $8.55 billion (£4.37 billion) operating loss, compared to income of $444 million (£227.2 million) in the first quarter of 2007, and Capital Markets posted an $8.85 billion (£4.53 billion) operating loss.

Despite the losses, the group's core insurance businesses continue to perform "satisfactorily" AIG said.

The company reported a 45.9 per cent dip in operating income for its general insurance arm to $1.61 billion (£0.82 billion) compared to the first quarter of 2007, while commercial insurance declined 48.3 per cent to $958 million (£490.2 million).

Personal Lines first quarter 2008 operating income was $7 million (£3.58 million), compared to $105 million (£53.73 million) last year.

Life insurance was essentially unchanged from last year, the company added.

Shares in the insurer closed two per cent down yesterday on the New York Stock Exchange, at $44.15 (£22.6).