(Bloomberg News) American International Group Inc., the insurer majority owned by the U.S. Treasury Department after a 2008 bailout, said first-quarter profit more than doubled on investment gains and lower claims costs from natural disasters.
Net income climbed to $3.21 billion, or $1.71 a share, from $1.3 billion, or 31 cents, a year earlier, when the insurer booked charges related to paying back a Federal Reserve credit line, according to a statement today from the New York-based company. Operating income, which excludes some investment results, was $1.65 a share, beating the $1.13 average estimate of 18 analysts surveyed by Bloomberg.
Chief Executive Officer Robert Benmosche, 67, has presided over a 47 percent surge in AIG's share price this year, as the insurer retired obligations to the Treasury and bought back shares, helping cut the department's stake to 70 percent. The transactions paved the way for a complete government exit, which Chairman Steve Miller said may come within a year.
"The biggest discussion with AIG seems to revolve around how quickly they can liquidate assets that could be used to repay the government," Paul Newsome, an analyst at Sandler O'Neill & Partners LP, said in a phone interview before results were released. "Investors have very wide-ranging views about both the size and the speed that AIG would be able to do that."
The Chartis property-casualty division posted pretax income of $910 million, compared with a loss of $374 million a year earlier. The division spent $1.02 for every premium dollar on claims and expenses, down from $1.19.
Catastrophe costs fell to $80 million from about $1.7 billion a year earlier. The March 2011 earthquake and tsunami in Japan was the most costly disaster for insurers last year, as the industry faced $105 billion in losses from catastrophes, according to Munich Re, the world's largest reinsurer.
Sales at Chartis, which insures commercial property, corporate boards and airplanes, fell 3.8 percent to about $8.82 billion as the company said it sought to improve on risk selection.
The insurer fell 14 cents to $34 at 5:10 p.m. in extended trading in New York. The Treasury needs to sell shares at an average of $28.72 to break even on the government's investment.
Net unrealized gains on bonds available for sale widened to $16.2 billion from $13.2 billion three months earlier, led by mortgage-backed and corporate debt. The figures, reflecting market fluctuations that aren't counted toward earnings, are monitored by investors and rating firms as a gauge of financial strength.