(Bloomberg) — American International Group Inc. more than doubled its dividend and increased its share buyback by $5 billion after asset sales helped build up cash, even as results slumped at some of the main insurance operations.
Net income slipped to $1.8 billion, or $1.32 a share, from $3.07 billion, or $2.10, a year earlier, New York-based AIG said in a statement Monday. Operating profit, which excludes some investing results, was $1.39 a share, beating the $1.21 average estimate of 21 analysts surveyed by Bloomberg.
AIG has been selling non-insurance assets and returning cash to shareholders as the company focuses on strengthening units that provide property-casualty and life coverage. Peter Hancock, who became chief executive officer last year, is also seeking to cut costs to help boost margins. The company trades for less than its net-asset value, even after a 15 percent rally this year.
AIG’s results are “a huge improvement from the bad old days, but well below its potential,” David Havens, a credit analyst at Imperial Capital, said in a note. “And that’s probably the biggest issue confronting management and the board today.”
AIG said Monday that it got about $410 million in the quarter through the sale of stock in consumer-finance company Springleaf Holdings Inc. Hancock in June raised about $3.7 billion in cash with the sale of most of its stake in AerCap Holdings NV.
The dividend was raised to 28 cents a share from 12.5 cents. The company restored a quarterly payout two years ago after suspending a dividend in 2008, the year the company received a U.S. bailout. AIG has been reshaping management after repaying the rescue. Hancock promoted Brian Schreiber to the chief strategy officer post to oversee acquisitions and divestitures, and added Doug Dachille to manage investments.
Book value, a measure of assets minus liabilities, fell to $79.74 from $80.16 as of March 31. Insurers including MetLife Inc. reported declines in the value of fixed-income holdings for the period as interest rates climbed.
Net unrealized gains on bonds available for sale narrowed to $12.1 billion on June 30 from $18.7 billion three months earlier, fueled by a drop in corporate debt, according to AIG’s quarterly report. The market fluctuations typically aren’t counted toward earnings, but are monitored by investors and ratings firms who gauge insurers’ financial strength.
AIG gained 5 cents to $64.20 in extended trading at 5:46 p.m in New York.
Pretax operating income at the commercial-insurance operation led by John Doyle declined 7.7 percent from a year earlier to $1.5 billion.