NEW YORK (Reuters) - American International Group Inc’s (AIG.N) first-quarter earnings fell slightly as low interest rates and weaker returns from alternative investments offset improvements in its commercial insurance business.
The U.S. insurer also said on Thursday that it authorized the buyback of up to $3.5 billion in additional shares.
AIG’s posted operating earnings of $1.69 billion, or $1.22 per share, in the quarter. That was down around 3 percent from a year earlier, when it had operating earnings of $1.74 billion, or $1.18 a share.
Analysts, on average, had expected earnings of $1.19 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear whether the analyst estimate was directly comparable to operating earnings.
The company’s net income rose more than 50 percent to $2.47 billion, bolstered by one-time gains from the sale of two of its large shareholdings.
AIG has focused more closely on its core businesses after bad bets on derivatives nearly sank the company - the largest commercial insurer in the United States and Canada - during the financial crisis.
“Our diversified business model and balance sheet deleveraging highlight how we have reduced our overall risk level,” AIG Chief Executive Peter Hancock said in a statement.
As interest rates have remained very low, bond investors - including insurers - have struggled to achieve adequate returns. AIG’s net investment income fell in all the company’s business segments.
In AIG’s commercial insurance segment, operating income rose to $1.46 billion from $1.42 billion as underwriting results improved, operating income at its consumer insurance operations fell around 19 percent to $945 million.
Reporting by Michael Erman. Editing by Andre Grenon