A unit of American International Group that provides consumer loans and credit insurance disclosed that it will restate its financials for three quarters to correct accounting treatments for certain derivatives transactions under FAS 133.

The adjustments at American General Finance Corp., which affect the three-month periods ended March 31, June 30, and September 30, 2005, will result in a $41.5 million increase to earnings but have no effect on total shareholder’s equity.

American General Finance Corp. is a wholly owned subsidiary of American General Finance Inc., which in turn is an indirect wholly owned subsidiary of American International Group. AIG spokesman Chris Winans told Bloomberg the restatement has no impact on net income or other financials at AIG.

American General elaborated that it is correcting errors in accounting for four cross-currency swaps designated as hedges of its foreign-currency-denominated debt. Previously, the company designated those swaps as hedges of changes in foreign exchange rates related to that debt.

The company also stated that its internal control over financial reporting was ineffective since the inception of its cross-currency swaps in June 2004 through the fourth quarter of 2005. As a result, American General concluded that this control deficiency constitutes a material weakness.

The company has taken certain actions to remediate this weakness. Among them: All new hedge-accounting policies, strategies, and transactions will be approved by the chief financial officer after consultation with financial management at AIG.