Exposure to US mortgage debt has forced AIG, the world's largest insurer, to declare its largest quarterly loss to date, the BBC has reported.
A net loss of $7.81bn (£4bn) was reported by the company for the first three months of this year. This is compared with a profit of $4.13bn for the same period last year. The figures have been linked to $9.11bn in charges as a result of US mortgage products -- which AIG had insured -- losing their value.
According to reports from the BBC, this marks the second consecutive quarter that AIG has had to declare record losses. Previous reports from AIG indicated that they had plans to remove their current chief financial officer amidst the plummet in profits.
The seemingly endless cycle of loss linked to the sub-prime mortgage sector has meant that AIG is one among several companies claiming significant decline in profit due to the US mortgage debt crisis. The BBC report adds that exposure of the sub-prime mortgages began as far back as last summer, when industry specialists revealed how damaging the loans – which could be obtained by people with bad credit – would be to the global economy. The BBC also shared that industry analysts have placed figures related to the effects of the US mortgage debt at over $300bn to date.
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