SAN FRANCISCO (Dow Jones) - In its latest quarterly report, American International Group has offered investors something it had never reported in the past -- a glimpse into the performance of its involvement in hedge funds and other exotic investments.

After pushing AIG (AIG) to be more transparent, analysts welcomed the Tuesday disclosure of so-called "partnership income," saying it would help them project future earnings more accurately.

"It's good to have this data because most insurance companies' investment dollars come from interest and dividends, which are usually fairly consistent quarter to quarter," said Peter Streit, an analyst at Williams Capital. "Outside of that, we like to know what else they're earning on their investments and the biggest swing factor is usually partnership income."

Insurers' earnings are mainly driven by the premiums they collect on policies and the losses they pay for claims. But before claims come in, companies also invest the premiums -- typically earning steady returns from bonds and other fixed-income instruments -- and that contributes significantly to their overall results.

However, AIG and other insurers also place bets using hedge funds and private equity funds. Quarterly income from these investments can be more volatile, making it harder to predict what insurers will earn in any period.

In the past, AIG only disclosed limited information about partnership income during conference calls with analysts. But in the company's second-quarter results, it volunteered much more data.

"For AIG to break this out is nice," Streit said. "Although AIG isn't the first, hopefully more companies will provide this information in future."

Partnership income at AIG's property and casualty division came in at $251 million during the second quarter, up 24% from the comparable period a year earlier, according to a statement issued by the company.

That represented one-fourth of the division's total net investment income of $ 1.04 billion in the period.

AIG has been criticized in the past for not disclosing enough information about its elaborate range of businesses.

In the wake of accounting investigations this year that forced out Maurice " Hank" Greenberg as AIG's longtime chief executive, the new leader, Martin Sullivan, pledged that the company would become more open.

Alain Karaoglan, an analyst at Deutsche Bank, said he was "encouraged by the company's continued efforts to

improve disclosure."

(END) Dow Jones Newswires

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