Friday, October 22, 2004

AIG just misses forecast; grand-jury probe looms

The Associated Press

NEW YORK - Third-quarter net income at American International Group Inc., one of the insurance giants named in an investigation into questionable sales practices, rose 7.5 percent in spite of higher catastrophe losses, but missed Wall Street's forecast by a penny.

The New York-based company also learned that its contract with cell-phone distributor Brightpoint Inc. is the target of a federal grand-jury investigation.

AIG learned from the U.S. Attorney for the Southern District of Indiana that it is a target of a federal grand-jury investigation for a contract with Brightpoint, of Plainfield, Ind., that allegedly involved what appeared to be insurance but didn't involve any actual risk transfer.

In September of 2003, AIG, which neither admitted nor denied wrongdoing, agreed to pay a $10 million fine to settle civil charges with the Securities and Exchange Commission in connection with a financial product it sold Brightpoint.

Shares of AIG closed Thursday at $56.45, down $1.15, or 2 percent, on the New York Stock Exchange.

AIG Thursday said third-quarter net income rose to $2.51 billion, or 95 cents a share, from $2.34 billion, or 89 cents a share a year earlier.

Excluding realized capital gains or losses, earnings rose to $2.54 billion, or 97 cents a share, from $2.58 billion, or 98 cents a share, a year ago.

Analysts were on average expecting earnings of 98 cents a share, excluding capital gains, according to Thomson First Call.

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