AIG Post $5 Billion Q4 Loss
NEW YORK - Insurer American International Group (AIG) has posted a fourth quarter loss of $5.3 billion (EUR3.4 billion), after unexpectedly large writedowns on subprime-linked derivatives investments, a capital loss of $2.63 billion amid changes to its investment portfolio, and $643 million of losses to other investments within its financial products division. It is the firm's worst quarterly result since its creation in 1919.
In the same quarter a year before AIG posted a $3.44 billion profit. Although 2007 still saw overall profits of $6.2 billion, the Q4 loss saw annual profits 56% down from $14.05 billion in 2006. AIG has blamed its recent misfortunes on declines in market values.
The firm has announced its internal auditor located the weaknesses in its accounts, with a $4.88 billion writedown on the value of credit default swap derivatives investments for October and November, indicating a December decline in the value on those investments by a further $6.24 billion.
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