American International Group, Inc. (AIG) said it will delay the filing of its Form 10-Q for the third quarter until Nov. 14.
The company said that the five day extension would allow it time to incorporate into its third quarter and nine month financial statements the correction of certain errors, most of which were previously identified. The most significant errors relate to the accounting for derivatives and related assets and liabilities under FAS 133, reconciliation of certain balance sheet accounts and income tax accounting.
AIG estimates that the errors identified in the third quarter of 2005 resulted in an understatement of previously reported consolidated retained earnings at June 30, 2005 of approximately $500 million. The effect on net income in prior periods may be positive or negative in a particular period and will vary in amount from period to period.
Due to the significance of these corrections, AIG said it will restate its financial statements for the years ended December 31, 2004, 2003 and 2002, along with affected Selected Consolidated Financial Data for 2001 and 2000 and quarterly financial information for 2004 and the first two quarters of 2005. AIG’s prior financial statements for those periods should therefore no longer be relied upon.
Estimated Third Quarter Results
AIG currently estimates that its net income for the nine months and three months ended September 30, 2005 will be approximately $10.1 billion and $1.7 billion, respectively, and that its adjusted net income, including the catastrophe losses described below, for the nine months and three months will be approximately $8.3 billion and $1.8 billion, respectively. These estimates may change, perhaps materially, as AIG completes its third quarter financial statements.
Estimated Catastrophe Losses
AIG’s current estimate of total after-tax catastrophe losses, net of reinsurance recoverables, for the third quarter is approximately $1.6 billion, including $1.03 billion due to Hurricane Katrina.
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