Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

AIG's operations show strength

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com -- Insurer AIG reported a quarterly net loss Friday due to the sales of some of its divisions, as the company undergoes a restructuring following its government bailout.

But its core insurance companies - which will be the company's largest units after its restructuring - nearly doubled their earnings. Shares of AIG (AIG, Fortune 500) were up about 1.8% after the announcement.

AIG reported a loss of $2.66 billion, or $3.96 per share, in its second quarter - compared with the $1.82 billion, or $2.30 a share, it earned in the year-earlier quarter.

AIG took a $3.3 billion charge for discontinued operations, including the sale of Alico, its second-largest foreign life insurance business.

Without charges, AIG said its adjusted net income was $1.34 billion, or $1.99 a share for the quarter, up from $1.14 billion, or $1.71 a share, a year earlier. Income from continuing operations more than doubled to $1.29 billion.

"AIG's continuing insurance operating results remain solid, while the company continues to execute on its restructuring plans and prepares for separation from the U.S. government," AIG Chief Executive Robert Benmosche said in a statement. "Our overall strategy remains unchanged."

The insurer still owes taxpayers about $102 billion of the $136.5 billion it took in a government bailout during the downturn. As a result of the bailout, the government still has an ownership stake in the company that can be converted into about 80% of its common shares and a $49.1 billion stake in its private shares.

Asset sales: Two large asset sales are part of Benmosche's strategy to raise funds to pay back taxpayers.

The company agreed in March to sell Alico to MetLife (MET, Fortune 500) for $15.5 billion and is planning a public offering for its Asian insurance unit AIA on the Hong Kong Stock Exchange in the fall.

Two months ago, AIG turned down a $30 billion offer for AIA from British insurer Prudential PLC (PUK), and industry analysts are unsure of whether AIG will be able to raise as much through an IPO.

Segment performance: AIG is also in the process of unwinding its financial products division, which was the source of the company's downfall in 2008. In the first six months of the year, that division reduced its derivative portfolio by 36%, down to $602.4 billion.

The financial products unit reported a $132 operating loss in the second quarter, nearly flat with its year-ago performance.

Meanwhile, AIG's property casualty insurance business - renamed Chartis last year - reported a $955 million profit, down slightly from $1 billion in the year-earlier quarter. Disasters - including the BP oil spill and Icelandic volcano - cut that division's revenue by $287 million, AIG said.

SunAmerica Financial Group, AIG's domestic life insurance and retirement division, earned $1.1 billion, up from $254 million in the year-earlier quarter.

Chartis and SunAmerica will serve as AIG's two core businesses once the company is independent from the government again, Benmosche said in pre-recorded remarks to investors Friday.

The company has also dealt with a recent leadership shakeup, as clashes with Benmosche led AIG Chairman Harvey Golub toresign from his position in July. Robert S. Miller, who has served on AIG's board of directors since 2009, was selected as Golub's replacement. To top of page

Index Last Change % Change
Dow 21,394.76 -2.53 -0.01%
Nasdaq 6,265.25 28.56 0.46%
S&P 500 2,438.30 3.80 0.16%
Treasuries 2.14 -0.01 -0.42%
Data as of 10:28pm ET
Company Price Change % Change
Advanced Micro Devic... 14.17 -0.21 -1.46%
Bank of America Corp... 22.82 -0.11 -0.48%
Micron Technology In... 31.73 -0.16 -0.50%
Ford Motor Co 11.04 -0.09 -0.81%
Oracle Corp 50.95 0.65 1.29%
Data as of Jun 23
Sponsors

Sections

A federal judge says Ivanka Trump must give a deposition in a lawsuit brought against her by an Italian shoemaker claiming her fashion label copied its designs. More

Orlando Lopez's parents brought him to the U.S. seeking the American Dream, but he didn't find true happiness until after he was deported to Mexico. More

The average guest at a wedding last year spent $888 per wedding, according to a study from the Knot. For those in the wedding party, the price of being a stand-up friend was over $1,000. More