American International Group Inc. (AIG) reported second-quarter operating earnings of $1.34 billion or $1.99 per share, significantly ahead of the Zacks Consensus Estimate of 99 cents and operating income of $1.14 billion or $1.71 per share in the year-ago period.
On a GAAP basis, AIG reported a net loss of $2.66 billion or $3.96 per share, compared with a net income of $1.82 billion or $2.30 per share in the year-ago quarter. This included loss from discontinued operations, derivative hedging loss and net realized capital losses, marginally offset by gains from divested businesses.
Although results from insurance operations appeared sluggish due to AIG’s ongoing business restructuring process, stability persists which has driven the book value per share during the quarter. It is notable that premiums, deposits and other considerations were up 24% year over year.
AIG’s continuing insurance operations reported an adjusted operating income (before net realized capital gains) of $2.2 billion, significantly ahead of $1.5 billion reported in the year-ago quarter.
AIG recorded catastrophe losses of $287 million in its General Insurance business. As a result, the division managed to earn $955 million compared with $1.0 billion in the year-ago quarter. Combined ratio was 102.0% compared with 98.2% in the prior-year period.
Earnings at Domestic Life & Retirement Services operations also increased to $1.1 billion, compared with $254 million in the year-ago quarter. Assets under management (AUM) grew to $233.8 billion as of June 30, 2010, up 10% year over year, due to the rally in the bond markets.
However, Foreign Life Insurance & Retirement Services operations reported a drop in income to $216 million from $239 million. The decline resulted primarily from a reduction in partnership and mutual fund income, as well as a decrease in policies in-force due to high lapses in 2009.
Financial Services operating pre-tax income increased to $42 million from a loss of $103 million in the year-ago quarter. Though the operating environment remains challenging, the company experienced signs of improvement.
In Other Operations, the company reported a pre-tax income of $226 million, compared with a loss of $488 million in the year-ago period. The growth reflects lower levels of newly reported delinquencies, higher mortgage cure rates and international delinquent loans, which led to favorable prior-year development of $232 million.
Also, interest expense on the Federal Reserve Bank of New York (FRBNY) Facility reduced to $755 million from $1.4 billion in the year-ago period. The company also reported a valuation gain on its interest in Maiden Lane III of $358 million, compared with approximately $1.0 billion in the prior-year period.
Financial Update
As of June 30, 2010, AIG reported a $4.6 billion increase in total equity from year-end 2009 to $102.7 billion.
Government Loan Update
As of June 30, 2010, AIG had outstanding net borrowings under the FRBNY Credit Facility of $20.5 billion, plus accrued interest and fees of $6.0 billion. The remaining available amount under the Department of the Treasury commitment was $22.3 billion, as of June 30, 2010. Net borrowings under the FRBNY Credit Facility decreased by $1.2 billion from June 30, 2010 to July 28, 2010.
Business Update
In July 2010, AIG announced plans to conduct an initial public offering of its Asian unit, American International Assurance Company Ltd. (AIA), by seeking a listing of AIA on the Hong Kong Stock Exchange, subject to regulatory approvals and market conditions.
AMER INTL GRP (AIG): Free Stock Analysis Report
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Although results from insurance operations appeared sluggish due to AIG’s ongoing business restructuring process, stability persists which has driven the book value per share during the quarter. It is notable that premiums, deposits and other considerations were up 24% year over year.
AIG’s continuing insurance operations reported an adjusted operating income (before net realized capital gains) of $2.2 billion, significantly ahead of $1.5 billion reported in the year-ago quarter.
AIG recorded catastrophe losses of $287 million in its General Insurance business. As a result, the division managed to earn $955 million compared with $1.0 billion in the year-ago quarter. Combined ratio was 102.0% compared with 98.2% in the prior-year period.
Earnings at Domestic Life & Retirement Services operations also increased to $1.1 billion, compared with $254 million in the year-ago quarter. Assets under management (AUM) grew to $233.8 billion as of June 30, 2010, up 10% year over year, due to the rally in the bond markets.
However, Foreign Life Insurance & Retirement Services operations reported a drop in income to $216 million from $239 million. The decline resulted primarily from a reduction in partnership and mutual fund income, as well as a decrease in policies in-force due to high lapses in 2009.
Financial Services operating pre-tax income increased to $42 million from a loss of $103 million in the year-ago quarter. Though the operating environment remains challenging, the company experienced signs of improvement.
In Other Operations, the company reported a pre-tax income of $226 million, compared with a loss of $488 million in the year-ago period. The growth reflects lower levels of newly reported delinquencies, higher mortgage cure rates and international delinquent loans, which led to favorable prior-year development of $232 million.
Also, interest expense on the Federal Reserve Bank of New York (FRBNY) Facility reduced to $755 million from $1.4 billion in the year-ago period. The company also reported a valuation gain on its interest in Maiden Lane III of $358 million, compared with approximately $1.0 billion in the prior-year period.
Financial Update
As of June 30, 2010, AIG reported a $4.6 billion increase in total equity from year-end 2009 to $102.7 billion.
Government Loan Update
As of June 30, 2010, AIG had outstanding net borrowings under the FRBNY Credit Facility of $20.5 billion, plus accrued interest and fees of $6.0 billion. The remaining available amount under the Department of the Treasury commitment was $22.3 billion, as of June 30, 2010. Net borrowings under the FRBNY Credit Facility decreased by $1.2 billion from June 30, 2010 to July 28, 2010.
Business Update
In July 2010, AIG announced plans to conduct an initial public offering of its Asian unit, American International Assurance Company Ltd. (AIA), by seeking a listing of AIA on the Hong Kong Stock Exchange, subject to regulatory approvals and market conditions.
AMER INTL GRP (AIG): Free Stock Analysis Report
Zacks Investment Research
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