AIG Sees Close to $15 Billion Loss Because of Subprime Investments
- Feb 29, 2008
New York–American International Group declared almost $15 billion in subprime mortgage-related writedowns and losses Thursday, the Financial Times reports.The New York-based insurer’s net loss for the fourth quarter was $5.29 billion as a result. Full-year earnings were reduced by more than half to $6.2 billion.AIG expects the U.S. housing market to stay soft and feels credit market chaos will continue, said chief executive Martin Sullivan.Nearly $11.5 billion of the writedowns were connected to AIG’s dealings in collateralized debt obligations (CDO), which are often backed by subprime mortgage bonds. The company also posted $3.3 billion worth of charges due to the sharp value declines in its residential mortgage-backed securities holdings during the quarter.