"It is not going to be a pretty quarter," said Keefe Bruyette & Woods analyst Clifford Gallant, who forecasts AIG will be buffeted for the third quarter in a row by losses on derivatives linked to subprime mortgages.
Fears abound that investment income for the world’s largest insurer could be disappointing, and that insurance businesses will post less-than-enthusiastic earnings.
Over the past two quarters, AIG has recorded more than $20 billion in losses from credit default swaps — a type of guarantee on debt collateralized with a range of assets, including subprime mortgages.