AIG Discloses `Material Weakness' in CDS Portfolio Accounting

Discussion in 'Wall St. News' started by makloda, Feb 11, 2008.


    AIG Discloses `Weakness' in Derivative Accounting (Update1)

    By Hugh Son

    Feb. 11 (Bloomberg) -- American International Group Inc., the world's largest insurer by assets, fell as much as 6.1 percent after auditors found a ``material weakness'' in how the company values its credit-default swap portfolio.

    AIG hasn't yet determined the decline in value that will be included in its 2007 financial statements, the New York-based insurer said in a regulatory filing today. The firm dropped $2.87 to $47.81 at 9:36 a.m. in New York Stock Exchange composite trading.

    The company, which has units that originate, insure and invest in subprime loans, has declined about 30 percent in the past year. AIG said in December that the value of the ``super senior credit derivatives'' declined by about $1.1 billion in the first two months of the fourth quarter.

    ``AIG is still accumulating market data in order to update its valuation'' of the portfolio, it said in today's filing.


    Stock down 10% on my screen.