AIG fell due to auditor founding
American International Group Inc., the world’s largest insurer by assets, fell the most in 20 years in New York trading after its auditor found faulty accounting may have understated losses on some holdings. Auditors had found some discrepancies in the way the firm’s derivatives portfolio had been valued. The credit-default swaps issued by AIG, which to protect fixed-income investors against losses, declined by $4.88 billion in value in October and November, four times more than previously disclosed. The insurance firm also had also accounting scandals in 2005 which lead to the ouster of former CEO Maurice Greenberg.
The company is now accumulating market data in order to update its valuation and determine it’s fair price.
AIG’s third-quarter net income declined 27 percent to $3.09 billion on losses linked to the U.S. housing slump, including a $352 million reduction in the value of the derivatives. The company is expected to announce fourth-quarter results later this month.
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