AIG delayed the filing of its 2004 10-K report three times earlier this year. In that report the company restated earnings and added $850 million to its loss reserve for asbestos and environmental liabilities. The company also restated earnings going back to 2000 at that time.

In addition to its alleged involvement with brokers in bid-rigging and steering, Mr. Spitzer and the SEC have examined AIG's use of finite reinsurance, which the SEC said was used to smooth earnings at other companies by disguising a loan as an insurance transaction.

AIG said the most significant errors causing this restatement relate to the accounting of derivatives. The errors are expected to add $500 million to earnings, the company said.

Because of the correction, AIG would restate its earnings statements going back to 2002, selected financial data in 2001 and 2000. Quarterly information for 2004 and the first two quarters of 2005 would also be affected.

The carrier said it estimates adjusted net income for the third quarter will be $1.8 billion, and $8.3 billion for the nine months ending Sept. 30.

Catastrophe losses will come in at $1.6 billion after tax and net of reinsurance recoverables.

The company cautioned that the catastrophe loss estimate could change due to a number of factors stemming from the unprecedented nature of Hurricane Katrina and other uncertainties.

In an investor's note, William Wilt at Morgan Stanley & Co. called AIG's action "a surprise," but added that while there could be some losses in the stock price, overall the company enjoys "considerable advantages" in the market place.

Late today, Standard & Poor's said it would take no rating action against AIG over the delay. The rating agency said the carrier can easily handle the catastrophe loss and that there would be little effect on shareholder's equity on earnings as the company indicated.