AIG posts first-quarter loss of $4.35B, a year-over-year improvement

American International Group Inc. reported a first-quarter loss of $4.35 billion, or $1.98 a diluted share, but the insurer’s results improved year-over-year. A year earlier, the New York-based carrier posted a loss of $7.81 billion, or $3.09 a diluted share. Net-realized-capital losses also improved, with AIG reporting a $2.63 billion loss, compared with $3.96 billion a year earlier. Meanwhile, most of the roughly $180 billion in bailout money given to AIG by the Federal Reserve went toward paying off counterparties, or banks, that participated in credit default swaps with the company. The federal funds count as liabilities on AIG’s balance sheet. Chief executive Edward Liddy reported that the company continues to unwind the notorious London- and Wilton, Conn.-based AIG Financial Products Corp. unit, reducing the number of trade positions in the portfolio to 28,000 at the end of March, down from about 35,000 at the end of last year. The notional value of the unit’s portfolio was $1.5 trillion as of March 31, down from $1.6 trillion in December. This time, Mr. Liddy said that the insurer has taken no new loans from government. “We believe the results we announced today indicate good progress on our efforts to stabilize the company and preserve [the] value of our businesses,” David Herzog, AIG’s finance chief, said during a conference call. However, he noted that the negative effects of market disruption will continue to hurt the company’s financial results for at least the next few quarters. The company is in the early stages of combining its domestic life and retirement services businesses in order to create a brand that is separate and distinguishable from AIG, said Paula Reynolds, chief restructuring officer at the insurer.Further, she said that the company is considering an initial public offering of up to 20% of AIU Holdings, the insurer’s property/casualty business, which is supposed to be spun off from the rest of AIG. The IPO would depend on market conditions, Ms. Reynolds said. In recent months, the carrier sold AIG Private Bank Ltd. in Zurich, Switzerland, to a subsidiary of Aabar Investments PJSC in Abu Dhabi, United Arab Emirates, for about $253 million. This week, AIG Financial Products also sold off its commodity index business to UBS Investment Bank, a unit of Zurich-based UBS AG. That transaction will cost $15 million upon closing, and additional payments of up to $135 million will be made over the next 18 months, based on future earnings of the new business. AIG still has a $30 billion line of credit that it hasn't used.