A bank analyst has lowered his second-quarter earnings estimate for American International Group based on credit market deterioration and expected accelerated recognition of credit default swap (CDS) losses by the company's new management.

Joshua Shanker with Citigroup, in a multicompany analysis released yesterday, revised his AIG estimate to 50 cents per share for the second quarter compared to a previous estimate of $2.18 per share. For the fiscal year, Mr. Shanker's estimate drops from $2.94 per share to $1.29 per share.

Mr. Shanker cited current credit market conditions as one reason for the revision. “After modest improvement in credit conditions in the first half of the quarter, credit spreads and credit indices deteriorated again in June,” the analysis states.

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