American International Group Inc. reported earnings results for the third quarter and nine months ended September 30, 2009. The company's results reflected positive market valuation changes. For the third quarter ended September 30, 2009, the company reported net income attributable to AIG of $455 million, including net income attributable to AIG common shareholders of $92 million, or $0.68 per diluted common share, compared with a net loss of $24.5 billion or $181.02 per diluted share in the third quarter of 2008. Third quarter 2009 adjusted net income was $1.9 billion or $2.85 per diluted common share, compared with an adjusted net loss of $9.2 billion or $68.36 per diluted common share in the third quarter of 2008. Results reflect continued stabilization in performance and market trends. Net investment income was $1,134 million against $522 million a year ago. Net realized capital gains were $92 million against losses of $1,366 million a year ago. Operating income was $814 million against operating loss of $1,261 million a year ago. For the nine months, the company reported net income attributable to AIG of $2,076 million or $24.92 per diluted common share, compared with a net loss of $37,630 million or $287.99 per diluted share in 2008. Nine months 2009 adjusted net income was $2,310 million or $1.51 per diluted common share, compared with an adjusted net loss of $14,122 million $108.08 per diluted common share in 2008. Net investment income was $2,456 million against $2,457 million a year ago. Net realized capital losses were $561 million against losses of $2,105 million a year ago. Operating income was $1,908 million against $1,466 million a year ago. Book value per share on AIG Shareholders' Equity was $540.19 against $529.25 a year ago.

American International Group Inc. said it would 'vigorously' defend itself against a California lawsuit that accuses the multiline insurer of acting as an 'unregulated hedge fund.' Policyholder Linda M. Harris, who also is a financial planner who had recommended that her clients purchase AIG annuities, has asked Los Angeles Superior Court Judge Yvette M. Palazuelos to 'stop AIG's on-going unlawful, deceptive and unfair business practices,' and is seeking an injunction, according to Harris' law firm, Aguirre, Morris & Severson. The plaintiffs in the case purchased annuities with death benefits from AIG's SunAmerica Annuity and Life Assurance Co. 'AIG merged the stocks, bonds, and funds of its insurance companies into an internal hedge fund that AIG executives recklessly exposed to market risks not permitted under insurance investment rules,' the plaintiffs argue. The filing seeks a court order requiring AIG to report within 90 days to the court showing the corrective action has been taken.

Marsh Inc. and American International Group Inc. are defendants in a lawsuit that claims the companies conspired to inflate premiums by millions of dollars. The lawsuit was filed by Seaboard Corp. and alleges that Marsh's actions resulted in an inability to receive a fair market price. The lawsuit is the latest in a series of steps taken against Marsh after former New York Attorney General Eliot Spitzer exposed the scheme in 2004. Marsh paid $850 million to settle an earlier case arising from the allegations. The current lawsuit will seek more than $66 million.