American International Group's

(AIG) - Get Report

chief restructuring officer, Paula Reynolds, said in an off-the-cuff remark during this week's earnings conference call that she told CEO Ed Liddy that it "might be better to go to jail" than to deal with securities laws relating to reorganizing the insurer.

An analysis of the 10-K document filed with the

Securities and Exchange Commission

explains why she might feel that way. AIG, the largest U.S. insurer, released 725 pages of information on Monday. In the summary, there wasn't one figure that showed how much AIG paid for its investments such as fixed income, equities, mortgages.

AIG has reinvented the definition of "cost" and, consequently, made it impossible to understand where the investment losses lie. AIG's group insurance companies posted $23.6 billion in investment losses in the first nine months of last year, so this is an important detail.

AIG lists investment types by category on its balance sheet. There are three columns of figures: cost, fair value and amount, enabling investors to see the purchase price of an investment, what AIG thinks it's currently worth and the total amount. Nothing special there, except there is a note at the bottom of the page that reads: "Original cost of equity securities and fixed maturities are reduced by other than temporarily impairment charges, and, as to fixed maturities, reduced by repayments and adjusted for amortization of premiums or accrual of discounts."

In other words, AIG isn't reporting the original cost of its investments. The insurer is instead listing the cost, minus losses already taken.

Let's say you bought a house for $500,000 in cash two years ago. In recent months, its market value dropped by $300,000. If you sell it, you would lose $300,000. AIG is reporting that the house cost $200,000, the fair value is $200,000 and is recorded as an asset of $200,000.

AIG's financial disclosure is among the most opaque of any company. That's why nobody really knows AIG's true health. The company's reports don't help us understand.

Even AIG's Liddy had this to say on Monday: The company's overall conglomerate structure is simply too complicated, unwieldy and opaque for its component businesses to be well-managed as a single mammoth corporation.

The fourth-quarter report was released earlier this week. (AIG suffered a record $62 billion net loss for the quarter, and the


Department created a $30 billion equity capital facility, in addition to $150 billion it has already lent the insurer.) And the first quarter ends in less than four weeks. What is the state of AIG? We can't know. The insurer didn't provide any insight into the current quarter.

It's unlikely that AIG is turning a profit again in this tough market. There will be more losses. But to what degree? We won't know, even when AIG publishes its next report.

Gavin Magor joined Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.