AIG Swings To 2Q Profit As Write-Downs Wane; Sees Stabilization

   DOW JONES NEWSWIRES 
 

American International Group Inc. (AIG) returned to the black after six straight quarters of losses as the second-quarter's results were absent the major write-downs which have been pressuring the insurance giant's results.

The company said it sees stabilization in some of its businesses. That comes as AIG sells off assets and plans to turn other operations into independent public companies.

Shares were recently up 9.8% at $24.75 in premarket trading. The stock through Thursday was already up 71% this week.

Chairman and Chief Executive Edward Liddy said the results "reflect stabilization in certain of our businesses" and were driven by lower net realized capital losses.

"While our insurance companies' operating results remain challenged, largely driven by weak economic conditions and the lingering effect of negative AIG events earlier in the year, performance trends stabilized from the first quarter," he went on to say. Liddy added that the company expects volatility in its results to continue in the coming quarters, partly because of charges related to restructuring.

AIG - which is 80% owned by the U.S. government following its rescue of the company last September - posted income of $1.82 billion, or $2.30 a share, compared with a year-earlier loss of $5.36 billion, or $41.13 a share. Excluding capital losses and other items, earnings were $2.57 a share, compared with a prior-year loss of $10.15.

Revenue jumped 48% to $29.53 billion.

Operating income at AIG's general-insurance business dropped 19% on a decline in underwriting profit, while net premiums written fell the same amount. Combined ratio, or the portion of premiums paid out on claims and expenses, rose six percentage points to 98.2%.

Meanwhile, the life-insurance and retirement-services segment's loss narrowed sharply as the company said it had a difficult but improving operating environment.

-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; [e-mail]