AIG overstates net income for past five years by €3.1bn
Following an extensive internal review, the world's largest insurer by market value also said it cut its net worth through the end of 2004 by $2.26bn, or 2.7%, less than it previously warned.
The $3.9bn reduction in net income for the five years through 2004 included an increase in AIG's asbestos reserve of $850 million for the fourth-quarter of 2004, AIG said in its annual report, which was filed with the US Securities and Exchange Commission.
The report, which was delayed three times, was filed with the SEC a week after New York authorities filed a civil lawsuit against the company, as well as former chief executive Maurice "Hank" Greenberg and its former financial chief, saying they committed fraud and manipulated the books.
"There is both good and bad news," said Michael Chren, senior portfolio manager of National City Investment Management. He said investors were pleased to finally see the filing and called the smaller-than-expected reduction in net worth a positive.
"But the big negative from our perspective is the asbestos reserve review. That will leave a cloud over the shares," Mr Chren said.
The stock had lost as much as $57bn of market value in recent months.
The New York state lawsuit said Mr Greenberg and former CFO Howard Smith, who were ousted when the investigation first picked up steam, took part in numerous fraudulent business deals that exaggerated the strength of the company's core underwriting business and propped up its stock price.
The insurer's press statement and securities filing yesterday followed several releases by the company that laid out numerous accounting errors going back more than a decade.
"We are embarking on a new era for AIG that will be marked by changes in the way we operate including greater responsiveness and transparency...," said AIG president and chief executive Martin Sullivan.
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