Global insurance companies today announced losses and profits slumps as the credit crunch starts to bite the industry.
New York-based AIG most widely known in the UK for sponsoring Manchester United reported a loss of $5.36 billon (£2.75 billion) for the last three months, compared to a $4.28 billion profit in the same period of 2007.
The American insurance company saw a $6.08 billion (£3 billion) hit on its mortgage-backed securities which have slumped in value due to the subprime crisis while it also saw $5.56 billion (£2.8 billion) losses on insurance policies designed to protect investors from losses.
AIG chief executive Robert B. Willumstad said: "Our second quarter results were adversely affected by the severe conditions in the housing and credit markets and a very difficult investment environment.
"These results do not reflect the earnings power and potential of AIG's businesses and it is clear that we have a lot of work to do to restore AIG's profitability to where it should be."
In Europe, German insurer Allianz most widely know in the UK for its Formula 1 sponsorship saw net income for the last quarter fall 28 per cent to 1.5 billion (£1.2 billion), while operating profits fell 36 per cent to 2.1 billion (£1.6 billion).
Losses were put down to its banking unit Dresden where operating profit was down from to 427 million to a loss of 566 million.
Income premiums for life and health insurance fell ten per cent for the firm, but Helmut Perlet, Allianz CFO, said the profits from insurance in the current "tough" market attested to the firms "strong underlying fundamentals".
Paris-based Axa saw adjusted earnings fall one per cent to 3.3 billion and net income down 29 per cent to 2.2 billion.
The firm took a 739 million loss from the fall in value of asset backed securities and mutual funds.
In the UK, insurer Friends Provident saw a 20 per cent fall in profits, with the chairman admitting there was a lot to do.
Meanwhile Royal&SunAlliance reported what it described as "strong results in challenging trading and economic condition" with profit after tax rising 23 per cent to £292 million.