The contracts declined by about $4.88 billion in October and November, according to data in a regulatory filing today. The drop was confirmed by company spokesman Chris Winans. AIG had said in December that the value of the "super senior credit derivatives'' fell by about $1.1 billion in those two months. The stock retreated 11 percent to $45.16 as of 10:19 a.m. in New York Stock Exchange composite trading.
AIG has lost about a third of its market value in the past year on concern that the U.S. housing slump will reduce earnings and the value of its holdings. The company has units that originate, insure and invest in subprime loans or securities. AIG hasn't yet fully determined the decline in value of the swaps in the fourth quarter, the New York-based insurer said in the regulatory filing today.
"AIG is still accumulating market data in order to update its valuation'' of the portfolio, it said in today's filing.
The insurer said it believes it presently has ``procedures to appropriately determine the fair value'' of the portfolio for the yearend financial statements.
AIG's third-quarter net income declined 27 percent to $3.09 billion on losses linked to the U.S. housing slump.