$14bn wiped off insurer’s market value
The world’s largest insurer, AIG, has raised its estimated losses from the sub-prime mortgage crisis five-fold from $1bn to $5bn.
This follows a warning by its auditors, PWC, that the insurer had shown a “material weakness” in the way it valued its exposures.
Recent estimates put potential losses for securities linked to subprime mortgages at $400bn. AIG has already written credit default swaps worth $78bn on collateralised debt obligations.
The company’s price plummeted by over 11 per cent in the wake of the news; $14bn was wiped off the company’s market capitalization in the process.
