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August 02, 2012 at 01:51 PM
American International Group today reported a 27 percent increase in earnings in the second quarter of this year, compared to the same period last year, and predicted that “we are close” to paying off the government for its enormous investment in AIG starting in 2008.
The release said that AIG also believes the government will make a profit on its investment.
The growth was primarily in its critical insurance operations, and was nearly double the consensus of Wall Street analysts.
Operations at its SunAmerica domestic life insurance unit jumped 29 percent.
A key was strong growth — 51 percent — in its variable annuity business, as the company expands its distribution of this key product while its competitors reduce their aggressive marketing out of concern that it may be difficult to properly capitalize the business.
Another factor cited by AIG president and CEO Robert Benmosche in the earnings summary is that, “Every day, the people of AIG continue to make significant progress in restoring our reputation in the communities we serve; respect for the AIG name has endured among our partners and customers.”
Its Chartis multinational property and casualty operations reported a 20 percent hike in net income.
The company said net income attributable to AIG was $2.3 billion and after-tax operating income was $1.9 billion for the quarter ended June 30, 2012, compared to net income of $1.8 billion and after-tax operating income of $1.2 billion for the second quarter of 2011.
He reiterated that in October, the SunAmerica Financial Group segment will be renamed AIG Life and Retirement, and that the property and casualty insurance operations will return to the AIG name, from Chartis.
A factor in the growth of sales of Chartis, its multinational property and casualty unit, was a stronger market and a focus on more profitable and less risky lines of pc business.
Benmosche said individual variable annuity deposits totaled $1.3 billion in the second quarter of 2012, citing “innovative product enhancements and the expansion of the SunAmerica sales organization at a time when several major variable annuity competitors have scaled back their variable annuity business.”
He said retail life insurance sales grew three percent during the second quarter of 2012 over the second quarter of 2011 as a result of a continued focus on expanding distribution. “Overall, net flows were positive despite a low interest rate environment,” Benmosche said.
AIG said the life unit, SunAmerica Financial Group, reported operating income of $933 million in the second quarter of 2012, compared to operating income of $723 million in the second quarter of 2011.
