AIG Sees 1Q Profit More Than Double
May 03 2012 - 4:33PM
Dow Jones News
Profit at American International Group Inc. (AIG) more than
doubled, to $3.21 billion in the first quarter, driven by improved
results at its core insurance operations and changes in the value
of two major holdings.
AIG's operating income of $3.1 billion, or $1.65 a share, beat
analysts' consensus estimate of a $1.12 per share profit. Operating
profit excludes some investment results.
Operating results at AIG's domestic life insurance and
retirement services business rose 12%, to $1.31 billion before
taxes, while the company's property-casualty arm swung to a $1.04
billion profit from a loss of $424 million in the same period a
year earlier, the company said in a statement Thursday.
Chief Executive Officer Robert Benmosche has said that improving
results at both operations are critical for AIG to meet the
"aspirational goals" the company laid out last year. The goals
include boosting AIG's return on equity to over 10% by 2015,
slashing costs and deploying up to $30 billion in capital on share
buybacks, dividends or acquisitions.
"Our profits this quarter illustrate, ultimately, the health of
our business," Benmosche said in the statement. The New York-based
insurer, which is still 70% owned by the U.S. Treasury as a result
of its bailout during the financial crisis, is "keenly focused on
building on our successes," he said.
First-quarter results were helped by an increase of more than
$1.8 billion in the value of the company's minority stake in Asian
life insurer AIA Group Ltd. (AAGIY, AAIGF, 1299.HK), whose Hong
Kong-listed shares rose during the quarter.
AIG once owned all of AIA, but now must reflect changes in AIA's
stock price in its quarterly results. The company recently sold off
more of those holdings, which will reduce their effect on
earnings.
AIG's interest in Maiden Lane III, a bailout-era facility
designed to remove some mortgage-linked instruments from the
insurer's books, added $1.25 billion to operating profit before
taxes. It had added $744 million in the same period a year
earlier.
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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