United Guaranty Corp., the mortgage insurance subsidiary of American International Group, had operating income of $13 million for the first quarter, down from operating income of $73 million for the same period last year.
A statement from AIG said the decline was due to lower earned premiums due to businesses put into run-off in 2008, higher losses as a result of an increased number of denied or rescinded claims that UG made in the first lien business being overturned (and thus coverage is reinstated) and lower favorable loss development when compared with the first quarter 2010.
These were partially offset by the favorable impact of an operational change in the mitigation of second lien claims.
New York-based AIG reported net income of $269 million, vs. net income of $1.8 billion one year prior.
