American International Group Inc (AIG) on Monday reported a decline in second-quarter profit, hurt by weakness at its insurance business, debt-related losses and lower gains from the sale of investments, while the prior year had disinvestment gains.
However, AIG's earnings easily topped Wall Street estimates, helped by contributions from aircraft leasing giant AerCap as well as investments in a Chinese insurance company.
Separately, AIG said it will buyback an additional $5 billion of its common shares, and announced a 124 percent increase in quarterly dividend to $0.28 per share.
New York-based AIG reported second-quarter net income of $1.8 billion or $1.32 per share, compared with $3.1 billion or $2.10 per share a year ago.
Excluding items, operating earnings for the quarter were higher at $1.9 billion or $1.39 per share, compared with $1.8 billion or $1.23 per share in the prior year.
On average, 23 analysts polled by Thomson Reuters estimated earnings of $1.23 per share for the quarter. Analysts' estimates typically exclude special items.
The growth in operating profit reflects contributions from AerCap Holdings N.V. and the fair value of PICC Property & Casualty Co Ltd and People's Insurance Co (Group) of China Ltd investments, AIG said.
At AIG's commercial insurance business: quarterly earned premiums at property casualty segment fell 3 percent from last year to $5.1 billion while net investment income was up 6 percent at $1.1 billion; meanwhile institutional markets segment revenues surged 66 percent to $1.17 billion.
But pretax earnings at commercial insurance business fell 8 percent to $1.5 billion.
Combined ratio at commercial property-casualty worsened to 98.8 percent from 96.5 percent last year.
At its consumer insurance business: retirement segment revenue rose 2 percent from last year to $2.47 billion, life segment revenue climbed 5 percent to $1.63 billion, while earned premiums at personal insurance segment fell 7 percent to $2.81 billion.
Pretax operating earnings at consumer insurance business fell 9 percent to $1.02 billion.
AIG has been focusing more on its core property-casualty and life businesses, while divesting non-insurance assets and striving to shore up margins.
AIG closed Monday at $64.15, up $0.03 or 0.05%, on a volume of 7.6 million shares on the NYSE. In after hours, the stock fell $0.15 or 0.23% at $64.00.
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