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(Reuters) - American International Group Inc (AIG.N), the largest commercial insurer in the United States and Canada, reported a quarterly operating profit that breezed past analysts' estimates, and boosted its share buyback by up to $5 billion.
Shares of the company, which more than doubled its quarterly dividend, were slightly higher in volatile after-market trading on Monday.
The results were primarily driven by investments in one of China's biggest insurers and earnings from the insurer's stake in aircraft lessor AerCap, but lower underwriting at most of its units caused concern.
S&P Capital IQ analyst Cathy Seifert said AIG only beat because of income from a company it had essentially taken off its balance sheet.
AIG, which has been trying to exit AerCap Holdings NV (AER.N), sold most of its 46 percent stake in the world's largest independent aircraft leasing company in June.
Pretax earnings from AerCap more than doubled to $127 million in the second quarter ended June, helping push AIG's operating income after tax to $1.9 billion, or $1.39 per diluted share.
AIG, which traces its roots to a two-room office in Shanghai in 1919, also gained $170 million from investments in the People's Insurance Group of China Ltd (1339.HK) and its subsidiary, PICC Property and Casualty Co Ltd (2328.HK).
Analysts on average had expected earnings of $1.22 per diluted share, according to Thomson Reuters I/B/E/S.
Underwriting income fell in all of the company's units, except retirement insurance.
"I found the insurance underwriting results fairly disappointing across the board and I'm hoping they don't portend a broader-based weakness," analyst Seifert said.
Pretax operating profit fell 4 percent to $1.19 billion at the commercial property and casualty insurance business, traditionally AIG's forte, as the unit struggled with plummeting rates.
Industry rates for commercial property and casualty insurance fell for the third quarter in a row, according to a survey published last month by the Council of Insurance Agents & Brokers.
AIG also paid out $88 million more in catastrophe losses.
Travelers Cos Inc (TRV.N), which vies with AIG for the title of the biggest U.S. commercial property and casualty insurer, reported a stronger-than-expected quarterly profit as catastrophe losses halved.
The combined ratio at AIG's property and casualty unit inched up during the quarter to 98.8 percent from 96.5 percent.
A ratio below 100 percent means an insurer earns more in premiums than it pays out in claims.
AIG raised its quarterly dividend to 28 cents per share.
The company's shares closed at $64.15 on the New York Stock Exchange.
Reporting by Richa Naidu in Bengaluru; Editing by Sriraj Kalluvila