AIG has reported an after-tax loss of $US2.2 billion ($2.16 billion) for the quarter to December 31 and a full-year loss of $US898 million ($885 million) after increasing reserves.

The giant US company reported net income of $US11.2 billion ($11 billion) in the quarter and $US7.8 billion ($7.69 billion) for the full year, during which it sold assets, worked to improve its financial strength and repaid loans from its US Government bailout.

AIG’s property and casualty insurer Chartis reported a $US4 billion ($3.94 billion) loss in the quarter after adding $US4.2 billion ($4.14 billion) to strengthen its reserves against claims from asbestos, excess casualty and workers’ compensation.

Chairman Robert Miller told shareholders AIG “is now on the cusp of completing a truly remarkable recovery from dependence on government support to becoming an independent leader in insurance services worldwide”.

Chartis’ fourth-quarter 2010 global net written premiums rose 9.4% to $US7.6 billion ($7.49 billion), reflecting the consolidation of Fuji Fire & Marine Insurance Company, but fell 3.3% with the exclusion of Fuji.

Mr Miller attributed the decline to challenging economic conditions impacting exposures and a competitive property and casualty market.

He says Chartis has been reducing exposures to capital-intensive businesses to target less volatile segments such as specialty commercial and consumer businesses.

The fourth-quarter results contained a $US17.6 billion ($17.3 billion) gain from the sale of divested businesses including the AIA Group and American Life Insurance Company.

This year AIG expects to take a $US3.3 billion ($3.25 billion) charge in the first quarter relating to its recapitalisation, but will report a $US2.16 billion ($2.13 billion) gain from the sale of its interest in Nan Shan Life last month.

President and CEO Robert Benmoshe says the group lost some business in 2009 “because of the cloud hanging over AIG”, but last year surrender levels and employee retention returned to pre-crisis levels.