AIG said higher-than-forecast claims costs cut fourth-quarter profit by $4.1 billion, and $2 billion previously designated to repay its bailout will be used to bolster the property-casualty unit.
The insurer reached an agreement with the US Treasury Department permitting the company to keep $2 billion of proceeds from the sale of Star Life Insurance and Edison Life Insurance, AIG said. Funds will be used by Chartis for losses tied to coverage including workers’ compensation and asbestos liability.
AIG is adding to reserves, a sign that it underestimated the cost of claims, while rivals including Travelers Cos have been taking profits after determining they had set aside more funds than necessary.
