AIG To Restate Results of Past Five Years
American International Group (AIG) will shed nearly $2.7 billion from its net worth as it prepares to restate its financial results for the past five years because of accounting errors.
AIG has also delayed the filing of its annual 10-K report for 2004 for the third time, claiming that it will be filed by May 31 at the latest.
The Star Online says:
The restatements follow an internal probe begun in response to investigations by New York attorney-general Eliot Spitzer and the SEC into the insurance giant’s accounting practices.
The US$2.7bil represents a 3.3% cut in the company’s net worth, US$1bil more than the original reduction of US$1.7bil estimated at the end of March.
The money overstated makes up about 3.3% of AIG’s shareholder equity.
As Guardian Unlimited explains,
AIG’s problems are the latest in a series of financial scandals that continue to dog corporate America. The firm is under investigation by the New York attorney general Eliot Spitzer and the securities and exchange commission. Shares in the company have fallen by almost a third since the disclosure in February that the firm was under investigation, though yesterday they jumped 7% after the disclosures, which were seen as not as damaging as initially feared. Some analysts said the size of the restatements was manageable, putting the investment community’s uncertainty to rest.
Blame for the accounting errors has been placed on “the direction of certain former members of senior management”.
Former CEO Maurice “Hank” Greenberg and former CFO Howard Smith ran AIG for 30 years.