AIG second-quarter profit rises, insurance units all gain
(Reuters) - American International Group Inc (AIG.N: Quote) reported a larger profit for the second quarter on Thursday, as tax benefits boosted results and operating income grew across the company's varied insurance businesses.
The company also reported more than $11 billion in liquidity at the parent company level, a cash pile most people expect it will use to buy down some of the government's remaining stake.
Net profit rose to $2.33 billion, or $1.33 per share, from $1.84 billion or $1 a share a year earlier.
Operating income was $1.06 per share. Analysts polled by Thomson Reuters I/B/E/S on average expected earnings of 57 cents per share.
Net income was boosted by a tax allowance release of some $1.28 billion, the latest in a series of tax benefits the company has been able to recognize as it returned to profitability. It was partially offset by a tax expense of $331 million and an increase to legal reserves of $450 million.
The company, still 61 percent-owned by the U.S. Treasury after its $182 billion bailout, ended the quarter with roughly $11.5 billion in parent company liquidity.
Analysts and investors expect the company will use a large chunk of that cash to buy back some of the Treasury's stake, perhaps as soon as the next few days. In recent quarters the Treasury has launched a share sale the day after results.
Some of that capital came from the sale of assets in Maiden Lane III, the crisis-era bailout vehicle set up by the Federal Reserve Bank of New York. AIG has already received $6.1 billion in proceeds from MLIII asset sales and expects to receive another $1.9 billion this month.
Chartis, the company's global property insurer, reported a rise in operating income to $936 million from $783 million a year earlier, as pricing grew, catastrophe losses fell and it expanded in more valuable business lines. Continued...