On Thursday, AIG announced a $4.35 billion loss for the first quarter of 2009, as compared to a net loss of $7.81 billion in the first quarter of 2008 and a net loss of $61.7 billion in the fourth quarter of 2008. AIG stated that the loss resulted “from a number of restructuring and market disruption-related charges and accounting charges related to taxes.”
The earnings release also includes an update on AIG’s ongoing restructuring efforts. As previously reported, on April 20, AIG reported that it had successfully restructured preferred stock held by the U.S. Treasury, and secured an additional $29.835 billion in long term funds from Treasury. At the same time, AIG reported that it had reached an agreement with the Federal Reserve Bank of New York to adjust its credit facility to facilitate the agreement and remove the 3.5% LIBOR borrowing rate floor.
AIG also reported that, as of March 31, 2009, AIG Financial Products Corp (AIGFP) had reduced its derivatives portfolio to approximately $1.5 trillion, a nearly 40% reduction from December 31, 2007, and reduced its trading positions 20% during the first quarter of 2009. AIG also has completed asset sales worth more than $1.4 billion, including the sale of AIG Life Insurance Company of Canada and AIG Private Bank Ltd. More recently, AIG announced the sale of 21st Century Insurance Group for $1.5 billion in cash and $400 million in capital notes.
AIG disclosed that it is still in the process of completing its spin-off of AIU Holdings, an entity created to house its more profitable business segments, a transaction that was recently accelerated. Also, AIG continues to examine the feasibility of combining its Domestic Life Insurance & Retirement Services businesses to enhance market competitiveness.
In its Form 10-Q filing with the Securities and Exchange Commission, AIG’s management expressed its belief that “it will have adequate liquidity to finance and operate AIG’s businesses, execute its asset disposition plan and repay its obligations for at least the next twelve months.”