AIG posts US$1.5b net profit for Q1
Source: Agencies |
May 8, 2010, Saturday
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Print Edition
Print Edition
AIG, the insurance giant bailed out by the federal government, yesterday reported net income of US$1.45 billion for the first quarter, citing financial market improvement and its efforts toward streamlining operations.
About US$1.17 billion in profit came from businesses AIG agreed to sell during the first quarter.
AIG was able to avoid cutting the value of risky assets that forced it to receive more than US$180 billion in a government bailout during the credit crisis in late 2008. The federal government owns 80 percent of the New York-based insurance company.
AIG's return to profitability reflected a lack of write-downs and growing investment income as stock and credit markets improved in the quarter ended March 31.
The amount of outstanding government assistance rose by 4 percent during the first quarter to US$134.21 billion. The added government assistance does not reflect the roughly US$51 billion AIG will receive from sales of two major foreign insurance units it agreed to sell during the first quarter.
The two deals -- the biggest since AIG began selling divisions to repay the government -- are expected to close by the end of the year. AIG plans to use that money to reduce its government loans.
In March, AIG agreed to sell its American Life Insurance Co division for US$15.5 billion to MetLife Inc and its Asia-based life insurer, AIA Group, to Britain's Prudential Plc for US$35.5 billion.
In another positive sign, AIG's main insurance division, Chartis, saw its net premiums written fall just 1.1 percent from the same quarter last year and actually jump 10 percent from the previous quarter. General insurance premiums totaled US$7.64 billion during the first quarter.
Investors will want to see improvement in AIG's ability to generate new business because once it has sold non-core assets, it will have to rely on traditional insurance underwriting to repay the rest of its government loan.
Overall, AIG reported net income of US$1.45 billion, or US$2.16 per share, during the first quarter, compared with a loss of US$4.35 billion, or US$39.67 per share, during the same period a year earlier.
About US$1.17 billion in profit came from businesses AIG agreed to sell during the first quarter.
AIG was able to avoid cutting the value of risky assets that forced it to receive more than US$180 billion in a government bailout during the credit crisis in late 2008. The federal government owns 80 percent of the New York-based insurance company.
AIG's return to profitability reflected a lack of write-downs and growing investment income as stock and credit markets improved in the quarter ended March 31.
The amount of outstanding government assistance rose by 4 percent during the first quarter to US$134.21 billion. The added government assistance does not reflect the roughly US$51 billion AIG will receive from sales of two major foreign insurance units it agreed to sell during the first quarter.
The two deals -- the biggest since AIG began selling divisions to repay the government -- are expected to close by the end of the year. AIG plans to use that money to reduce its government loans.
In March, AIG agreed to sell its American Life Insurance Co division for US$15.5 billion to MetLife Inc and its Asia-based life insurer, AIA Group, to Britain's Prudential Plc for US$35.5 billion.
In another positive sign, AIG's main insurance division, Chartis, saw its net premiums written fall just 1.1 percent from the same quarter last year and actually jump 10 percent from the previous quarter. General insurance premiums totaled US$7.64 billion during the first quarter.
Investors will want to see improvement in AIG's ability to generate new business because once it has sold non-core assets, it will have to rely on traditional insurance underwriting to repay the rest of its government loan.
Overall, AIG reported net income of US$1.45 billion, or US$2.16 per share, during the first quarter, compared with a loss of US$4.35 billion, or US$39.67 per share, during the same period a year earlier.
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