AIG to take $4.1 billion fourth-quarter charge


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Bailed-out insurer American International Group Inc said it will take a $4.1 billion fourth-quarter charge at its Chartis unit, and the U.S. government will allow it to retain $2 billion from recent sales to bolster capital at that unit.

AIG had been restructuring by selling business such as its AIG Star Life Insurance Co and AIG Edison Life Insurance Co, to refocus on core units including global property insurer Chartis and U.S. life insurer SunAmerica under Chief Executive Robert Benmosche.

But an annual loss-reserve review of Chartis showed it needed to put more money aside related to accidents from 2005 and earlier, AIG said in a statement on Wednesday.

To boost capital at Chartis after the charge, the U.S. government agreed to let AIG keep $2 billion from its sales of AIG Star Life and AIG Edison Life Insurance Co.

"As a result, AIG expects that the Chartis insurance companies' statutory surplus will remain largely unaffected," the statement said.

The government will still be repaid in full for its investment in AIG despite the change in the distribution of asset sale proceeds, a source familiar with the matter said on Wednesday.

"At the end of the day the whole point is strengthening (AIG's) balance sheet," the source said.

AIG shares fell less than 1 percent in premarket trading to $42 from $42.37 on Tuesday.

The reserve strengthening -- a total of $4.6 billion, not including $446 million in discount and premium adjustments -- is mostly related to asbestos, excess casualty, excess workers' compensation and primary workers' compensation, the insurer said.

AIG will report full fourth-quarter results after the market closes on February 24. Through Tuesday, analysts on average had expected the company to report a profit of 61 cents a share, according to Thomson Reuters I/B/E/S.

The company and the U.S. Treasury are expected to sell at least $15 billion in stock in May.