AIG Profit Surges On Gains; To Buyback $3.5 Bln. Stock

(RTTNews) - American International Group Inc (AIG) on Thursday reported a surge in first-quarter profit, helped by the sale of investments as well as improved underwriting in commercial property-casualty and mortgage guaranty businesses.

AIG said it would buyback an additional $3.5 billion of its stock, and declared a dividend of $0.125 per share.

Peter Hancock, who stepped in as CEO in September, has been striving to boost performance at the property-casualty unit which he previously headed, with efforts at cutting costs.

AIG posted first-quarter net earnings of $2.47 billion or $1.78 per share, compared with $1.61 billion or $1.09 per share last year.

Results included $874 million in net realized capital gains, mainly from the sale of two large shareholdings, AIG said.

Excluding items, operating earnings for the quarter were $1.22 per share, compared with $1.18 per share a year ago.

On average, 22 analysts polled by Thomson Reuters estimated earnings of $1.19 per share for the quarter. Analysts' estimates typically exclude special items.

Operating results were amid improved underwriting results in commercial insurance, lower alternative investment returns, and the effect of low interest rates on investment income, AIG said in a statement.

From the prior quarter, AIG began reporting in two new segments: commercial insurance and consumer insurance.

During the quarter, pretax earnings at commercial insurance rose 3 percent from a year ago, on underwriting results at property-casualty and mortgage guaranty units, partly offset by lower investment income from institutional markets.

Combined ratio at the commercial property-casualty improved to 97.1 percent from 98.9 percent last year. Earned premiums fell 2 percent to $4.93 billion, and net investment income fell 3 percent to $1.03 billion.

Pretax operating earnings at the consumer insurance segment fell 19 percent, as both retirement and life businesses waned.

The company said the segment was hurt by lower net investment income, higher operating expenses and less favorable mortality gains.

Retirement revenues slid 4 percent to $2.39 billion, life revenues were almost flat, and earned premiums at personal insurance fell 5 percent to $2.78 billion.

AIG had a book value of $80.16 per share at the end of the quarter, up from $71.77 a year ago.

The company repurchased about $1.4 billion of its stock in the first quarter earlier this month, and about $800 million this month.

AIG closed Thursday at $56.29, down $0.36 or 0.64%, on a volume of 6.6 million shares on the NYSE. In the past year, the stock has traded in the range of $48.56 - $58.73.