AIG sees market affecting mortgage units into 2009
NEW YORK (Reuters) - American International Group (AIG.N) sees weak market conditions in the U.S. residential market affecting its operating results at two mortgage units into 2009, its chief executive said on Friday.
"Operating results of these business have been and will likely continue to be affected into 2009 by continued credit quality deterioration of mortgages and weak residential housing market, and the overall U.S. economy," Martin Sullivan said, on a conference call with investors, a day after the insurer posted a record $7.8 billion first-quarter loss, and said it planned to raise $12.5 billion to strengthen its balance sheet.
Although AIG's quarterly loss was largely driven by a costly write-down of assets linked to subprime mortgages, the company also reported operating income weakness across much of the company, including in mortgage insurance and loan units.
United Guaranty Corp, which insures private mortgages against default, reported an operating loss of $352 million in the first quarter. And American General Finance, which makes loans, reported weaker operating income of $11 million in the same period, due to reduced residential mortgage originations, lower revenue and an increase in the allowance for loan losses, AIG said.
(Reporting by Lilla Zuill, editing by Dave Zimmerman)
