Industry News

AIG expects second year of mortgage-insurance losses

Delinquencies at UGC nearly doubled from 2006

Billions in write-downs on derivates and other losses related to mortgages put insurer American International Group Inc. deeply in the red during the fourth quarter, and the company expects another "significant operating loss" at its mortgage insurance division in 2008. AIG said a $5.3 billion fourth-quarter loss was largely driven by $11.2 billion in write-downs of credit default swaps that cover investments with exposure mortgages. AIG also reported a $2.63 billion fourth-quarter capital loss related to the reduced value of its investment portfolio, and a $643 million charge related to investments held by its financial products unit, AIG Financial Products Corp. The fourth-quarter losses put a considerable dent in the company's profits for the year, which totaled $9.3 billion, down nearly 40 percent from $15.4 billion in 2006. In a press release, the company said it expects U.S. housing markets to remain weak and that credit market uncertainty will likely persist in 2...