AIG, the world's largest insurance company, has seen $1 billion wiped from its third quarter net income due to the significant financial impact of the storm season in the Americas.

Third quarter 2005 net income was $1.72 billion or $0.65 per diluted share, compared to $2.69 billion or $1.02 per diluted share in the third quarter of 2004. The decline represented a 36% drop in net income on the previous year.

The major cause of the fall in net profits was the insurer’s exposure to catastrophe related losses which trebled from $512 million or $0.19 per diluted share last year to $1.57 billion or $0.60 per diluted share in third quarter 2005.

However, net income for the first nine months of 2005 was $10.02 billion or $3.82 per diluted share, compared to $8.29 billion or $3.14 per diluted share in the first nine months of 2004. These results include net catastrophe related losses per diluted share in 2005 versus 2004 of $0.60 and $0.19, respectively.

Meanwhile, AIG has revealed that it will restate its earnings from 2002 through 2004, as well as selected consolidated financial data for 2001 and 2000 and quarterly data for 2004 and the first half of this year, due to accounting errors.