The company also said it had improperly boosted its reported investment income by $300 million by selling options on the bonds in its portfolios. The deal, which resulted in a corresponding decrease in realized capital gains, had no effect on shareholder equity.
AIG also revealed that it may not be able collect as much as $300 million in debts owed to its U.S. operations. It also may have to take a $370 million charge relating to the way it accounted for acquisition costs. AIG also plans to reclassify how it accounted for some investment income and some deferred compensation paid to company employees.
The company did not elaborate on the reasons for the accounting changes. AIG's auditor, PricewaterhouseCoopers, did not return calls for comment.
Stock analysts had mixed reactions to the announcements.
Merrill Lynch & Co. analyst Jay A. Cohen called the impact of the restatements "manageable" in his report. He said the stock's 22 percent slide since the regulatory investigation was announced in February an "overreaction."
But Morgan Stanley & Co. analyst William M. Wilt and his team wrote that "the depth and breadth of troubles and apparent lack of accounting controls at AIG is alarming."
AIG has been in and out of regulatory trouble for several years over its sale of insurance products that some public companies used to make their financial results look better, and it was implicated in a bid-rigging scandal last fall.
Staff writer Carrie Johnson contributed to this report.
