Couldn’t help but notice that American International Group Inc. announced yesterday that its third-quarter net income fell 36% to $1.72 billion (65 cents a share) as a result of recent large catastrophe losses. This comes on the heels of the announcement from last week that AIG would restate its results dating to 2002 to correct errors in the way it accounted for certain types of derivatives contracts, which restatement came only six months after AIG had completed an earlier restatement for the same periods. Just to make matters as murky as possible, AIG also also announced yesterday that it had revised its results for 2000 and 2001.
Inasmuch as yesterday’s earnings announcements were in line with forecasts and came after the close of trading, they did not have much of an impact on trading. AIG’s shares increased 26 cents to $67.50 in regular trading yesterday and, in after-hours trading, the shares dropped 30 cents to $67.20. The stock hit a 52-week low of $49.91 this past spring during the period in which the company restated five years of results and cut shareholder’s equity by $2.26 billion as New York AG Eliot Spitzer sparred with former AIG CEO, Maurice “Hank” Greenberg. For the first nine months of this year, AIG’s profits were $10.02 billion ($3.82 a share), which is up from its restated (twice) profit of $8.3 billion ($3.14 a share) for the first nine months of 2004.

Meanwhile, AIG also announced that a group of its unidentified current and former employees had received Wells notices from the Securities and Exchange Commission, which is a formal notice that the SEC has made the preliminary decision to bring enforcement actions against the current and former employees in connection with the agency’s investigation into AIG’s accounting practices. A Wells notice gives prospective defendants an opportunity to respond directly to the SEC’s administrators regarding the SEC staff’s findings before the staff makes formal recommendations to the administrators on whether the agency should pursue civil regulatory actions against the defendants.
Welcome to life after Hank Greenberg, AIG investors. Tread carefully, because this type of uncertainty will be the norm for AIG for quite some time.