AIG Q4 08 lost 61 bil

AIG’s fourth quarter 2008 net loss resulted primarily from a number of restructuring and market disruption-related charges and other significant accounting charges related to taxes and intangible assets. AIG recorded tax expense of $21.0 billion for tax benefits not obtained for losses incurred during the quarter and other discrete period items. Included in market disruption-related items were pre-tax net realized capital losses arising from other-than-temporary impairment charges of $18.6 billion ($13.0 billion after tax) as well as a $6.7 billion pre-tax ($4.4 billion after tax) charge related to AIGFP’s credit valuation adjustment for mark-to-market adjustments where counterparty spreads increased and AIG’s own credit spread decreased, causing fair value losses on both AIGFP’s assets and liabilities. --net realized capital losses arising from other-than-temporary impairment charges of $18.6 billion ($13.0 billion after tax) reflecting severity losses primarily related to CMBS, other structured securities and securities of financial institutions due to rapid and severe market valuation declines where the impairment period was not deemed temporary; losses related to the change in AIG’s intent and ability to hold to recovery certain securities; and issuer-specific credit events, including charges associated with investments in financial institutions; Included in the restructuring-related items were pre-tax losses of $4.7 billion ($3.3 billion after tax) consisting of pre-tax net realized capital losses of $2.4 billion ($1.7 billion after tax) for certain securities lending activities which were deemed to be sales due to insufficient levels of collateral received from counterparties, plus pre-tax losses of $2.3 billion ($1.6 billion after tax) related to the decline in fair value of RMBS for the month of October 2008 prior to their sale to Maiden Lane II. Also included in restructuring-related items were $5.2 billion of pre-tax losses ($3.4 billion after tax) related to AIGFP mark-to-market losses for the month of October 2008 on super senior credit default swaps terminated in connection with Maiden Lane III. RMBS: 30bil CMBS: 11 bil CDO/ABS: 6 bil Market prices assumptioned used by AIG ABS Category 2008(%) 2007(%) ------------------------- RMBS Prime 50.46 84.32 RMBS Alt-A* 31.68 N/A RMBS Subprime 29.02 65.34 CMBS 54.5 92.96 CDOs 17.53 47.82 Other 50.92 92.11 Total 36.65 73.29