Operating Losses at UGC Declines Slightly

United Guaranty Corp., the Greensboro, N.C.-based mortgage guaranty business of American International Group, New York, had an operating loss of $488 million for the second quarter 2009, an improvement over a loss of $518 million for the same period last year. American General Financial Inc., which is where the mortgage lending operation resides, had a second quarter operating loss of $202 million, a fall-off in performance from the $40 million loss for the second quarter of 2008. AIG said this fall-off reflects the sales of real estate portfolios as part of liquidity management efforts and a $22 million increase in the provision for finance receivable losses. AIG Financial Products, which held the toxic securities that ended up placing the parent company in dire straits, posted a $132 million operating loss for the period, much improved over a $6.2 billion operating loss for the second quarter 2008. AIGFP's results include $636 million in unrealized market valuation gains on its super senior credit default swap portfolio and $702 million of interest charges from borrowings from the parent company that are being eliminated in an internal consolidation.