AIG second-quarter profit rises, insurance units all gain

Thu Aug 2, 2012 4:27pm EDT
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(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...

The logo of American International Group (AIG) is seen at their offices in New York September 18, 2008. REUTERS/Eric Thayer