AIG trumps forecasts but fears over its future growth weigh

City A.M. Reporter
AMERICAN International Group (AIG) earned a larger-than-expected profit during the third quarter, due in part to big gains on its investment holdings.

AIG reported an overall profit of $1.9bn, or $1.13 per share, for the period, compared with a loss of nearly $3, or $2.10 per share, in the year-ago quarter. Analysts had expected AIG to earn 86 cents per share, on average, according to Thomson Reuters.

Combined net investment income from AIG’s property-casualty and life and retirement divisions rose 15 per cent, contributing $505m to earnings. AIG’s sale of certain securities, including a stake in former subsidiary AIA Group, as well as higher values of bond holdings, contributed to those profits.

In AIG’s property-casualty division, net premium earnings fell 3.2 per cent during the quarter. Pricing improved, but AIG has been limiting risk-taking in the business, the company said. In its life and retirement division, premiums declined 2.7 per cent. Policy fees climbed five per cent, but low interest rates and costs related to a regulatory probe into death benefits also weighed on that business.

However, AIG’s shares fell in after-hours trading, which analysts attributed to fears over the sustainability of its profits.