The announcement by AIG direct insurance company that it will lose NIS 20 million in 1999, appears to contradict company chairman Maurice Greenberg’s prediction that the company would start to show a profit in the second half of 1999.
On October 30 last year, Greenberg, then visiting Israel, told "Globes" that AIG would start to make a profit in the second half of 1999. He said the company would lose in its first two years of activity in Israel, from May 1997 until May 1999, and then start earning. Greenberg cited heavy set-up expenses as the reason for the large losses.
To date, the company has lost more than NIS 70 million.
On Sunday, company general manager Ed Schneider said that AIG would lose NIS 20 million this year, compared to its NIS 32 million loss in 1998.
The company’s spokesperson commented that AIG relates to profit and loss figures in accordance with US criteria, which differ from those in effect in Israel, mainly where depreciation allowances are concerned.
"Under the method effective in the United States, AIG did, in fact, start to make a profit in the second quarter of 1999. But the Israeli company, owned in equal shares by AIG of the US and the Aurec group, is subject to Israel's insurance supervision directives, and its Israeli balance sheets will therefore, for the time being, continue to show losses.
"As far as US company AIG is concerned, AIG Israel is already a profitable company".
Published by Israel's Business Arena July 27, 1999