AIG Profit Tops Estimate; To Pay $960 Mln To Settle Securities Litigation

(RTTNews) - American International Group Inc (AIG) Monday reported a better-than-expected increase in second-quarter profit, aided by earnings in core insurance businesses as well as gains from the sale of its aircraft-leasing unit.

Separately, AIG in a regulatory filing said it agreed to pay $960 million as settlement against claims it misled investors over its financial health in the years leading to the 2008 financial crisis.

AIG shares were up 2.5 percent in after-hours trade on the New York Stock Exchange.

Commenting on the quarterly results, Chief Executive Robert Benmosche said AIG displayed resilience and discipline, underscoring focus on core insurance businesses.

This will be the last quarterly results under Benmosche, who will exit AIG on Sept 1. Benmosche will be replaced by Peter Hancock, currently in charge of the insurer's property casualty unit.

Under Benmosche, AIG has divested non-core assets, streamlined global operations while pushing for growth in newer markets.

For the second quarter, New York-based AIG posted net earnings of $3.1 billion or $2.10 per share, compared with $2.7 billion or $1.84 per share last year.

Results for the quarter included a $1.4 billion after-tax gain on the sale of its aircraft-leasing unit ILFC to AerCap Holdings NV.

Excluding items, operating earnings for the quarter were $1.8 billion or $1.25 per share, compared with $1.7 billion or $1.12 per share a year ago. On average, 24 analysts polled by Thomson Reuters expected earnings of $1.05 per share for the quarter. Analysts' estimates typically exclude special items.

AIG property casualty net premium written for the quarter declined 1 percent from a year ago to $9.21 billion.

Net premiums earned at property casualty was up 2 percent at $8.53 billion.

Ten analysts had a consensus revenue estimate of $8.13 billion for the quarter.

Pre-tax operating earnings at the property and casualty unit jumped 25 percent from last year to $1.36 billion; at life and retirement unit, this was up 3 percent to $1.18 billion.

Pre-tax operating earnings at mortgage guaranty unit increased about three-fold to $210 million.

Book value, a measure of assets minus liabilities, climbed to $75.71 per share, up 15 percent from last year.

Meanwhile, AIG's proposed $960 million settlement with investors, seeks to settle about half-dozen separate class-action complaints.

The company faced allegations of huge losses from investors, including buyers of stock and bond offerings in the two years before the company's bailout amid the financial crisis. Plaintiffs in the case included the state of Michigan's pension plan.

The settlement, however, is subject to federal-court approval.

AIG was previously the plaintiff in other lawsuits related to risky subprime mortgages and has recovered about $2 billion in settlements.

AIG also declared a dividend of $0.125 per share on its common stock, par value $2.50 per share.

AIG closed Monday at $52.66, up $0.61 or 1.17%, on a volume of 8.5 million shares. In after hours, the stock gained $1.34 or 2.54% at $54.00.