The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Bank results season: AIG getting out of the foxhole

American International Group Inc. (AIG – Analyst Report) reported first-quarter earnings of $809 million or $1.21 per share, significantly ahead of the Zacks Consensus Estimate of 48 cents. The company incurred a loss of $2.1 billion or $22.90 per share in the year-ago period.

On a GAAP basis, the company reported a net income of $1.5 billion or $2.16 per share, compared with a net loss of $4.4 billion or $39.67 per share in the year-ago quarter.

AIG reported robust results in its insurance operations. The solid results were driven by significant improvements in investment income. However, it is notable that premiums, deposits, and other considerations were down 6.5% year-over-year, primarily due to a fall in individual fixed annuities and lower life insurance sales. The company also said that the surrender activity has somewhat stabilized.

The company’s continuing insurance operations reported an adjusted operating income (before net realized capital gains) of $2.2 billion, significantly ahead of $908 million reported in the year-ago quarter.

While catastrophe losses somewhat muted the result of its General Insurance business, the division managed to earn $879 million, compared with $710 million in the year-ago quarter.

Earnings at Domestic Life & Retirement Services operations also increased to $1.1 billion, compared with a loss of $160 million in the year-ago quarter. However, Foreign Life Insurance & Retirement Services operations reported a drop in income to $220 million from $358 million.

Losses at its Financial Services business decreased to $474 million from a loss of $1.1 billion in the year-ago quarter. The company also reported a valuation gain on its interest in Maiden Lane III of $751 million, compared with a valuation loss on Maiden Lane III of approximately $1.9 billion in the prior-year period. The company also reported a $3.6 billion increase in total equity from year-end 2009 to $101.7 billion as of Mar 31, 2010.

The results of AIA and ALICO are reported as discontinued operations as a result of the sale announcements. AIA and ALICO reported $658 million and $543 million, respectively, of pre-tax income in 2010, compared with pre-tax income of $390 million and $175 million, respectively, in the prior-year quarter.

Prudential and Metlife must be a happy lot.


This entry was posted on May 7, 2010 by in Banking, Financial Markets, US.


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