American International Group, (AIG) has announced it will delay the filing of its Form 10-Q for the quarter ended 30 september, 2005 after discovering a number of errors that include a $500m hole in its accounts.
AIG said it currently expects that it will file its third quarter Form 10-Q on November 14, 2005. The extension will allow AIG time to incorporate the correction of errors into its third quarter and nine month financial statements.
The most significant errors identified relate to the material weaknesses in internal controls surrounding accounting for derivatives and related assets and liabilities under FAS 133, reconciliation of certain balance sheet accounts and income tax accounting.
It said that due to the significance of these corrections, AIG will restate its financial statements for the years ended 31 December, 2004, 2003 and 2002.
The company added that thus would be in addition to affected selected consolidated financial data for 2001 and 2000 and quarterly financial information for 2004 and the first two quarters of 2005.
AIG said its prior financial statements for those periods should therefore no longer be relied upon.
AIG currently estimates that its net income for the nine months and three months ended September 30, 2005 will be approximately $10.1bn and $1.7bn, respectively, and that its adjusted net income, including the catastrophe losses described below, for the nine months and three months will be approximately $8.3bn and $1.8bn, respectively.
AIG's current estimate of total after-tax catastrophe losses, net of reinsurance recoverables, for the third quarter is approximately $1.6bn. This includes $1.03bn for Hurricane Katrina and $0.2bn for Hurricane Rita.
