AIG Announces New Restatement

Most of these errors were identified during the remediation of previously disclosed material weaknesses in internal controls.

American International Group Inc. is restating again. The embattled insurance giant announced Wednesday that it will revise its financials after discovering an understatement of previously disclosed retained earnings of $500 million.

In May, AIG restated earnings downward by $3.9 billion over a five-year period.

The new restatement will cover the three years ended in 2004. The company added that it will restate selected consolidated financial data for 2001 and 2000 and quarterly financial information for 2004 and the first two quarters of 2005.

AIG will also delay filing its third-quarter report by five days to incorporate into its third-quarter and nine-month financial statements the correction of certain errors. Most of these errors were identified during the remediation of previously disclosed material weaknesses in internal controls; the most-significant errors concern accounting for derivatives and related assets and liabilities under FAS 133, reconciliation of certain balance-sheet accounts, and income-tax accounting.

The company added that it continues to believe its hedging activities have been and remain economically effective but do not qualify for hedge-accounting treatment.

AIG spokesman Chris Winans told the Associated Press that further investigation by PricewaterhouseCoopers LLP uncovered the additional errors. “It’s a reflection of continued deeper due diligence,” said Winans.

Separately, AIG announced the completion of previously disclosed statutory restatements of its General Insurance companies for the year ended December 31, 2004, which reduced the previously reported statutory surplus for those subsidiaries by about $3.5 billion, to roughly $20.6 billion. AIG asserted that statutory capital of each company continued to exceed minimum requirements, but it contributed $750 million to the General Insurance statutory surplus as of September 30.

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