AIG Posts Second Consecutive Quarterly Profit
American International Group Inc. also got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse.
Despite the improved performance, AIG CEO Robert Benmosche warned earnings will remain choppy as the company executes its restructuring plan.
"We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities," Benmosche said in a statement.
Investors' initial reaction to the report is negative. Shares of AIG fell $2.58, or 6.6 percent, to $36.70 in premarket trading.
AIG was bailed out in September 2008 by the government as the financial crisis spiraled out of control. The insurer has received aid packages with a total value of more than $182 billion from the government. In return for that financial support, the government received an 80 percent stake in AIG.
The company was not undone by its traditional insurance businesses, but instead by underwriting risky credit derivatives contracts. A collapse in the value of those contracts was the primary drive of AIG's near collapse.
AIG has been working for the past year to sell assets and streamline operations in an effort to repay the government debt. AIG was able to reduce the amount of money it owes the government during the third quarter.
As of Sept. 30, AIG's outstanding assistance from the government totaled $122.31 billion, down 4 percent from the end of the second quarter.
Of that outstanding assistance, AIG owes the government $85.66 billion in loans and interest, a 2 percent decline from the end of the second quarter. The remaining $36.66 billion in outstanding assistance is tied the value of certain investments the government bought from AIG. As those investments pay off or rise in value, the government recoups more money.
Net income available to common shareholders was $92 million in the three months ended Sept. 30 compared with a loss of $24.47 billion, or $181.02 per share, during the same quarter last year -- the quarter when it was initially bailed out.
Including the government's portion of the profit, AIG earned $455 million, or 68 cents per share, during the latest quarter.
Adjusted earnings, which excludes the government's stake and realized investment gains and losses totaled $385 million, or $2.85 per share.
Analysts polled by Thomson Reuters, on average, forecast earnings of $1.98 per share for the quarter. Analysts estimates do not always include all charges a company might take throughout the quarter.
During the second quarter, AIG's profit available to common shareholders was $311 million. Including the government's portion, AIG earned $1.82 billion.