|AIG FILES CURRENT REPORT ON FORM 8-K SUMMARIZING OCTOBER 9 CONFERENCE CALL|
NEW YORK, October 9, 2001 – American International Group, Inc. (AIG) today filed a Current Report on Form 8-K with the Securities and Exchange Commission. The Form 8-K summarizes the information discussed in a conference call for investors and analysts held today by AIG Chairman M. R. Greenberg.|
AIG continues to update the estimates of its total expected net losses resulting from the terrorist attacks of September 11, 2001. It is impossible for any company to precisely estimate its total losses at the current time. Although AIG’s property insurance coverages on the World Trade Center complex are minor, AIG expects ultimately to receive claims from many insureds across a wide range of coverages. Based on the information available at the current time, AIG’s net pre-tax losses are expected to approximate $800 million.
On August 29, 2001, AIG acquired American General Corporation (AGC) in a transaction accounted for as a pooling of interests. It is estimated that the combined entity will incur one-time pre-tax costs of approximately $1.3 billion in the third quarter of 2001 ($950 million after tax) with additional less significant costs expected to be incurred in the fourth quarter of 2001 and in 2002 and 2003 related to the ongoing integration of operations.
Approximately 40 percent of the one-time costs incurred in the third quarter are related to direct costs with respect to the acquisition such as investment banking, legal and accounting fees, employee severance and other termination benefits, and other compensation costs related to change in control provisions applicable to AGC executives. Also included in one-time costs are charges resulting from post-business combination plans. Such charges recognize that certain assets will have no future economic benefit or ability to generate future revenues. Such costs include asset impairment charges related to software, leasehold improvements and certain goodwill related to such operations as part of the post-business combination plans. Also included are certain adjustments associated with conforming AGC’s balances to AIG’s existing accounting policies and methodologies.
Ongoing costs with respect to the integration of operations will be expensed in future periods as incurred. AIG expects that these ongoing costs will include costs for the integration of computer systems, the training and relocation of certain employees and the consolidation of facilities.
As previously stated, AIG ultimately anticipates annual savings of approximately $400 million from the business combination, reflecting principally the benefits of reductions in redundant operations.
It should be noted that Mr. Greenberg’s remarks contained forward-looking statements. AIG refers you to the AIG Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, as supplemented by the Current Report on Form 8-K dated October 9, 2001 which restates AIG financial statements to reflect the acquisition of American General Corporation, and its past and future filings and reports filed with the United States Securities and Exchange Commission for a description of the business environment in which AIG operates and important factors that may affect its business. AIG is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG’s global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. American International Group, Inc.’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.