(Adds analyst comment, paragraphs 13-15)
Aug 4 Insurer American International Group Inc
reported a better-than-expected 12.5 percent rise in
quarterly profit, helped by strong performance across its major
businesses and the sale of its former aircraft leasing unit.
AIG noted that it bought back about $1.1 billion of shares
during the second quarter, part of the $2 billion in share
buybacks it authorized in June. The company also declared a
dividend of 12.5 cents per share.
AIG shares rose 2.4 percent in extended trading.
In commercial underwriting, AIG earned net premiums of $5.27
billion, up about 4 percent from a year earlier. The combined
ratio improved to 95.4 from 101.7. In consumer underwriting, AIG
earned net premiums of $3.25 billion, down slightly from a year
earlier. The combined ratio fell to 98 from 100.1.
A combined ratio below 100 indicates an underwriting profit,
meaning an insurer is receiving more in premiums than it is
paying out in claims.
"The combined ratio was finally below 100 percent," said
Gloria Vogel, an analyst with Drexel Hamilton in New York.
"However, the accident year combined ratio was slightly worse
than a year ago, and the expense ratio remains high."
Separately, AIG said it agreed to pay $960 million in cash
to resolve litigation brought in 2008 and 2009 by investors who
accused the insurer of misleading them about its finances ahead
of the financial crisis that necessitated a government bailout.
The parties on July 15 accepted a mediator's proposal to
resolve the dispute, AIG said in a regulatory filing.
The quarter's results also included sale of AIG's aircraft
leasing unit to AerCap Ireland Limited. That meant a $1.4
billion after-tax gain on the sale of International Lease
Finance Corp, (ILFC), AIG's last noncore business.
AIG is in the middle of a turnaround after almost collapsing
during the financial crisis under the weight of sour derivative
bets. It has repaid the $180 billion bailout funds from 2008 and
has focused on its core insurance business.
Net income, which included a $1.4 billion after-tax gain on
the sale of ILFC, rose to $3.07 billion, or
$2.10 per share, in the second quarter ended June 30 from $2.73
billion, or $1.84 per share, a year earlier.
On an operating basis, AIG earned $1.83 billion, or $1.25
per share. That was up from $1.12 per share a year earlier and
exceeded the average analyst estimate of $1.05 per share,
according to Thomson Reuters I/B/E/S.
In June, AIG said Peter Hancock, head of the company's
property-casualty business, would succeed Bob Benmosche as chief
executive and president, effective Sept. 1.
"I think Peter (Hancock) is largely going to be
strategically a continuation of the strategy Benmosche
identified," said Sanford C. Bernstein & Co analyst Josh
That means continuing to streamline and improve efficiency
and the use of data, Stirling said.
AIG shares were $53.95 after the bell, up 2.4 percent from
the closing price of $52.66.
(Reporting by Luciana Lopez in New York and Avik Das in
Bangalore; Editing by Sriraj Kalluvila and David Gregorio)