AIG's Third Quarter Hits Turbulence (Update 1)

  • AIG reports loss of $4.1 billion or $2.16 per share.
  • Operating loss at $1.60 per share versus estimates of 30 cent per share loss.
  • Takes $1.5 billion charge on International Lease Finance Corporation.

NEW YORK ( TheStreet) -- AIG ( AIG) posted its biggest quarterly loss since 2009, hurt by declining markets and an impairment charge on its plane-leasing subsidiary.

The insurance giant reported a net loss of $4.1 billion and an after-tax loss of $3 billion for the third quarter, compared with a net loss of $2.5 billion and an after-tax operating loss of $114 million for the third quarter of 2010. The third quarter 2011 after-tax operating loss per share was $1.60, compared with an after-tax operating loss per share of $0.84 for the third quarter last year.

Analysts were expecting the company to record an operating loss of 30 cents, though the range of estimates varied widely.

AIG recorded a $1.5 billion charge on International Lease Finance Corporation, to reflect various "economic, technological, and specific counterparty issues" that were identified in the quarter.

The insurance company also saw a $2.3 billion decline in the fair value of its holdings in AIA, while widening credit spreads and declining interest rates drove declines in the fair value of its mortgage backed securities portfolio.

"Despite the difficult external environment, we are encouraged by the progress we've made and the underlying strength of our core insurance businesses. Across AIG, we are seeing strong sales momentum as our employees continue to act as trusted partners to our customers, providing them with real value by consistently delivering quality insurance and investment products and services," said Robert H. Benmosche, AIG President and Chief Executive Officer.

Separately, the firm announced a plan to buyback $1 billion worth of common shares. Shares were up 0.4% in aftermarket hours.

--Written by Shanthi Bharatwaj in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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