AIG's Troubles Go Deeper: Reports
Up to 30 insurance transactions over the last five years at
American International Group
might have relied on faulty accounting, and the company is weighing restatements of between $1 billion and $3 billion, reports said Friday.
The bookkeeping overhaul could make it difficult for the insurance titan to file its annual report with the
Securities and Exchange Commission
before March 31. The
Wall Street Journal
reported that AIG's own investigators have identified 60 additional transactions that could be problematic. The total is far more than previously suspected.
AIG has been in regulators' lens all year over its suspected use of various reinsurance strategies to lop poorly performing policies from its balance sheet. Most of the controversy, which cost longtime CEO Maurice Greenberg his job earlier this month, has centered on whether the reinsurance transactions were subject to appropriate negotiation and risk-transfer, elements necessary for favorable accounting treatment.
According to reports Friday, investigators are combing through dozens of reinsurance transactions AIG struck with a network of offshore companies over which the company might have exerted undue influence or control. It isn't clear what the net effect of any restatements would be, or even if they would necessarily require a downward revision, the
Wall Street Journal
reported.
AIG's board met to discuss the problem Thursday and is still in talks with internal and outside investigators about the handling of any accounting revisions. A worst-case, $3 billion charge would only erase about one-third of the company's 2004 earnings, which were reported on a preliminary basis earlier this month. The company's long-term debt is currently rated triple-A by Moody's and Standard & Poor's, the highest possible rating.