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Nov-07-2009More Profit For AIG, But Challenge Too(topic overview)
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American International Group Inc. 's (AIG) third-quarter profit was driven by higher investment income and gains in the market value of its invested assets, while its core insurance operations struggled with a weak economy and lingering negative perceptions in the marketplace. After two consecutive quarterly profits, the company suggested that turning a profit in the fourth quarter might be tough, with an expected $5 billion charge connected with its special-purpose vehicles and a $1.4 billion after-tax loss from its sale of Nan Shan Life Insurance. [1] American International Group reported its second consecutive quarter in the black today, as the rallying credit markets boosted the value of assets on its books and the company took full advantage of accounting rules. The nationalized insurer's main problem these days: it's having a hard time selling insurance. The company pointed out continued declines in its sales and premiums at some of its main insurance businesses and said it will take a $5 billion charge against results for the fourth quarter.[2] AIG said an improved credit market has helped speed up the pace of asset sales. Last month, the company announced its biggest sales to date: an agreement to sell Taiwanese life insurance company Nan Shan for $2.2 billion. The company hasn't raised close to enough funds to pay back its loans. AIG said it will complete a previously announced sale of stakes in two of its foreign life insurance subsidiaries to the government this quarter. In exchange, the Fed will forgive $25 billion of its $44.8 billion loan to the insurer. Benmosche warned that sales of those giant subsidiaries would make future financial results more volatile, due to hefty restructuring charges. Insurance stabilizing: Though premiums were down, AIG said there were signs of stability in its core insurance businesses.[3] AIG, which the government has held a 79.9 percent interest in since the company accepted a government bailout, did not hold a public teleconference to answer financial analysts''' questions. It is the second quarter in a row the company has not held a public discussion of earnings. Robert H. Benmosche, AIG chief executive officer, as part of a lengthy statement reported the company had been helped by accounting changes. He said in addition to improved market performance and mutual fund income, AIG gained from '''the new investment impairment accounting standard adopted in the second quarter of 2009,''' which drove a reduction in net realized capital losses, Mr. Benmosche said. These gains '''were offset by impairments in the asset management segment, higher current accident-year losses related to credit crisis exposures and prior accident-year losses in general insurance and lower income from life insurance and retirement services investment-linked and annuity products globally.''' For the future, he said the company continues 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.'''[4]
Last Modified: Friday, November 6, 2009 at 4:14 p.m. American International Group Inc. The company was profitable for the second straight quarter as its core insurance operations continue to stabilize after the company's bailout by the government last year. AIG also said the amount of its government financial assistance dropped by 4 percent during the third quarter. Its results 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. While new insurance business stabilized compared with the second quarter, it is still sharply below year-ago figures as the economy remains weak and AIG struggles with its image after being bailed out by the government. A recovery in its core insurance operations is considered vital to AIG repaying the government. CEO Robert Benmosche warned that earnings will remain choppy as the company executes its restructuring plan.[5] The latest results included $1.95 billion in special gains, including from the improvement in the value of securities held by AIG Financial Products, the unit largely responsible for AIG's massive losses in 2008, which led to the U.S. bailout. While its financial problems stemmed from soured investments, AIG's insurance divisions have also suffered, as customers grew skittish about the company's viability and curtailed some business. Benmosche said AIG started to see signs of stabilization in the third quarter, but its main insurance businesses saw a drop in revenue.[6] The insurer's turnaround is a big reversal from a net loss of $24.5 billion, or $181.02 per diluted share, in the third quarter of 2008, and, ironically, a good deal of the profit during the third quarter was due to $1.95 billion in special gains from the improvement in the value of securities held by AIG Financial Products, the unit that led to AIG's losses and bailout in 2008.[7]
NEW YORK (CNNMoney.com) -- AIG reported its second profitable quarter in a row early Friday, as stabilization in its insurance businesses, and the credit and mortgage markets helped boost results. The troubled insurer said its net income rose to $455 million, or 68 cents per share, an improvement over the $24.5 billion loss from a year earlier.[3] The New York insurer reported third-quarter net income of $455 million, or 68 cents a share, compared with a stunning $24.5-billion loss during the same period last year, according to a regulatory filing. For the second straight quarter, AIG skipped an investor call to discuss its results. In a statement, Chief Executive Robert Benmosche was both optimistic and cautious in explaining the numbers. "Our results reflect continued stabilization in performance and market trends," he said.[8] Third-quarter results showed a net income of $455 million, or 68 cents a share compared with a net loss of $24.47 billion, or a reverse split-adjusted $181.02 a share, in the quarter a year ago, New York-based AIG said today in a regulatory filing.[9]
AIG is shedding American International Assurance and American Life Insurance as it looks to repay the massive $180 billion loan from the government. This outlook overshadowed AIG's profit of $455 million, or 68 cents a share, compared with a loss of $24.47 billion, or $181.02 a share, in the year-earlier quarter. These results include the government's portion of the profit.[10] Shares of AIG ( AIG ) are down 11% in pre-market trading despite reporting a third-quarter profit of $455 million, or 68 cents a share, compared to a loss of $24.5 billion, $181.02 a share, in the year-ago. Shares are trading lower following the comments from Chief Executive Officer Robert H. Benmosche, where he said the company will continue to focus on stabilizing and strengthening our businesses, but expects continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities.[11]
Asset sales to repay the government, AIG said, are expected to generate $5.6 billion after taxes and talks are underway with potential buyers of other businesses. American International Group, helped by accounting changes, posted a $455 million profit in the third quarter, its second period in the black, but management said it expects '''continued volatility''' for earnings.[4] American International Group Inc. posted its second profitable quarter in a row, but weak results at its main insurance businesses underscored the scale of the challenges the giant insurer still faces. AIG's third-quarter net income of $455 million, or 68 cents a share, was driven largely by write-ups at its financial-products division and higher investment income. Both came amid a rally in U.S. financial markets in the three months through September.[12] American International Group Inc shares, after rallying ahead of the results on Thursday, closed down $3.80, or 9.67 percent, at $35.48 on Friday. The insurer's latest results included $1.95 billion in special gains, sending AIG into the black once more, and helping to offset declines in operating revenue at its insurance businesses.[13]
NEW YORK, Nov 6 (Reuters) - American International Group Inc ( AIG.N ) tapped the U.S. government for another $2.1 billion to buy shares of its aircraft leasing arm, International Lease Finance Corp, or ILFC, the insurer said in a regulatory filing on Friday. AIG, bailed out last year by the government, is trying to sell ILFC. It was able to draw from a credit facility established by the Federal Reserve Bank of New York, and said in the U.S. Securities and Exchange Commission filing it expects to receive the funds on Nov. 13.[14] 'Even with the profit, AIG's still a sick company," said Robert Haines, an analyst at CreditSights Inc in New York. Chief executive officer Robert Benmosche, who started in August, is seeking to halt the departure of customers and employees so he can rebuild units he needs to sell to repay loans included in AIG's $182.3-billion bailout. Benmosche stopped auctions for an investment adviser and a pair of Japanese units because he said they were more valuable with AIG. AIG, which was rescued last year after soured bets tied to mortgages pushed it to the brink of collapse, owes $44.5 billion on its Federal Reserve credit line, $3.2 billion more than three months earlier. The figure rose as the firm propped up its plane-leasing unit by extending $2 billion in credit and paid down a U.S. commercial paper facility.[15]
The insurer has quadrupled in the past eight months on the New York Stock Exchange as bond markets rallied. AIG posted net income of $1.82 billion in the second quarter this year, its first profit since 2007, on narrowing investment losses and a rebound in the value of some derivatives.[16] Third quarter 2009 adjusted net income was $1.9 billion, compared to an adjusted net loss of $9.2 billion in the third quarter of 2008. AIG cited the stabilization of certain of its units and a rise in the value of its investments as the main factors in its recovery. Comparing AIG's earnings for the third quarter 2009 with Q3 2008 is difficult due to the $180 billion government bailout, a 20 for 1 reverse stock split, and government ownership of approximately 80 percent of the company, as well as the fact it has sold a number of its individual units.[17] Including the government's portion, AIG earned $1.82 billion. The Blackstone Group LP The hedge fund and private equity firm posted a narrower loss for the third quarter, as its private equity holdings gained value while its real estate investments stabilized. Adjusted results topped expectations, and positive comments from its CEO helped lift the stock in afternoon trading. Blackstone said its net loss attributable to common shareholders fell to $176.2 million, or 91 cents per common unit, from $340.3 million, or $1.56 per unit in the 2008 third quarter.[5]
The company made a $455 million net profit in the third quarter, compared to a $24.4 billion loss in the same period last year, when AIG came close to collapse.[18] Hannover Re AG The German reinsurance company reported net income of $235 million in the third quarter from a loss a year ago, as a result of an increase in premiums and a one-off profit related to a recent acquisition. The company, based in Hannover, lost $586.3 million in the year-ago quarter but was helped this year by a 23 percent increase in gross written premiums a measure of revenue to $3.6 billion.[5]
AIG Financial Products reported a $1.4 billion profit in the third quarter, compared to an $8.3 billion loss during the same period a year ago.[3] AIG Financial Products reported an operating profit of $1.4 billion for the quarter, up from an $8.2 billion operating loss last year. The unit has made progress in unwinding its derivatives portfolio, though notional value still stood at $1.1 trillion.[1]
General Insurance recorded net premiums written of $8.1 billion in the third quarter of 2009, a 13 percent decline compared to last year's third quarter. AIG said the decrease was partially due to the effect of foreign exchange, the sale in 2008 of the unit's Brazilian operations, and "the strategic decision to remain price disciplined, particularly in workers' compensation, as well as to the overall effect of the weakened economy."[17] The insurer essentially paid out $1.05 for every dollar it took in. AIG said its general insurance operations reported net premiums written of $8.1 billion in the third quarter of 2009, a 13% decline compared to last year'''s third quarter.[9]
AIG made $1.8 billion in capital losses, compared to $15.6 billion last year, as the value of previously written-down assets recovered. AIG said that it was making progress on its disposal plan, which involves selling non-core operations in order to repay its Government borrowings. The company recently announced the sales of its investment advisory and asset management business for $300 million and its Taiwan insurance company for $2.1 billion.[18] Over time, the company plans to unwind and shut down the unit. Friday's disclosure also showed that so far this year, AIG has sold or agreed to sell operations and assets expected to generate a total of about $5.6 billion in proceeds that could be used to repay its colossal debt to U.S. taxpayers. That debt includes a total rescue package of more than $180 billion, although the company's balance remains significantly lower. AIG shares fell $3.80, or 9.7%, to $35.48 after the company said its third-quarter property-casualty premiums dropped 13% and life insurance sales plunged 16%.[8] The company had sought to sell off major assets to help repay the United States. It has struggled to find buyers willing to pay enough. AIG said it will significantly reduce its federal loan balance in the fourth quarter as it completes a $25 billion pact with the Federal Reserve, giving the Fed a preferred stakes in life insurance units, AIA and Alico. AIG will record a charge of about $5 billion related to that deal and another $1.4 billion charge from its $2.15 billion October sale of Taiwan life insurance unit Nan Shan.[13] The company has struggled to find buyers for assets, hampering the process of repaying taxpayers. Its federal loan balance will be reduced by $25 billion in the fourth quarter as it consummates a pact to give the Federal Reserve a preferred stake in two of its largest life insurance units, AIA and Alico ( ALCO - news - people ).[6]
Life insurance and retirement services third quarter 2009 operating income was $2.2 billion compared to $1 billion in the third quarter of 2008. Concerning its government debt, AIG said its total balance outstanding from a Federal Reserve Bank of New York facility is $41 billion, including $35.8 billion of net borrowings and $5.2 billion of accrued compounding interest and fees, with availability of $24.2 billion.[4] AIG is still leaning on the government for assistance. In the third quarter, AIG drew down $2.1 billion from its Treasury commitment and reported that interest and fees on its New York Fed facility totaled $5.2 billion. Standard & Poor's Equity Research maintained its hold rating on the stock.[1]
AIG's asset management business reported a third-quarter operating loss of $1.1 billion, compared to an operating loss of $28 million in the third quarter of 2008. AIG president and chief executive officer Robert Benmosche said in a press release, "AIG also took several important steps in its restructuring program." Some of those included:.[7] The latest results "reflect continued stabilization in performance and market trends," AIG Chief Executive Robert Benmosche said in a statement. Benmosche however, after pointing out that business retention was at its highest level since September of 2008 with new business written exceeded $1.1 billion for the quarter, said that continued volatility in the coming quarters is to be expected. That makes sense considering AIG's ratio of earnings to payouts, which is quite bad.[9]
"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. AIG said it plans to record a $5 billion charge in the fourth quarter as it proceeds with spinning off two of its major life insurance businesses.[19] Premiums, deposits and other considerations dropped 38.6% from last year, to $13.7 billion. The company expects to take a $5 billion charge in the fourth quarter as it closes on the special-purpose vehicles connected to its foreign life insurance businesses AIA and ALICO, which will pay off $25 billion of its New York Fed credit line.[1]
Premiums, deposits and other considerations dropped 38.6% from last year, to $13.7 billion on lingering negative perceptions of AIG events and lower industry sales generally, Dow Jones reported. Standard & Poor's Equity Research maintained its hold rating on the stock. Its analyst, Catherine Seifert, noted that the company's earnings beat "was largely due to favorable credit spreads," while the insurance units posted "subpar underwriting results." Dow Jones Newswires reporters summed up AIG's improvement like this, "The mortgage, credit and stock markets have all improved significantly in the year since AIG's government bailout.[20] U.S. variable annuity sales fell for a fifth straight time in the second quarter as insurers, weakened by the stock market slump last year, scaled back offerings of the equity-linked retirement products. Sales of U.S. property and casualty coverage industrywide fell 1.4 percent to $434.6 billion in 2008, the biggest drop in half a century, and the slump continued this year, according to the Property Casualty Insurers Association of America.[16] Last year, the insurer'''s stock plunged 97 percent as AIG reported a $99 billion annual loss driven by declines on credit- default swaps and investments.[16]
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. The spinoffs of AIA and ALICO will help AIG reduce its outstanding assistance from the government by $25 billion. The government is taking preferred stakes in the two units as they are separated from AIG. AIG is also relying on improvement at its core insurance subsidiaries to generate profit to repay the government.[19] In return for that financial support, the government received an 80 percent stake in AIG. The company was undermined not by its traditional insurance businesses, but instead by underwriting risky credit derivatives contracts. A collapse in the value of those contracts was the primary driver of AIG's near collapse. Recovering financial markets and changes in accounting rules have helped AIG to write up the value of its remaining risky assets. Blum said, however, the portfolio of risky investments could again lose value or AIG could be forced to take losses as it sells them off. AIG had $1.1 trillion in derivative contracts sitting on its books as of Sept. 30, many of which are tied to risky mortgage debt.[19] The U.S. propped up the company with three more bailouts through March as investment declines put AIG at risk of credit-rating downgrades that would have forced further payments to securities firms. The Financial Products unit that sold the derivatives may report that some of its losses reversed in the period ended Sept. 30, showing a $2.5 billion gain, Credit Suisse Group AG analyst Thomas Gallagher said this week in a note.[16]
This here's the big one; the one that really brought the scare; the one that made the markets tremble at the thought of what might happen if the Fed let another financial giant fall. What's worse, AIG ( AIG ) isn't even a bank--it's actually the nation's largest insurance corporation. What made the case of AIG so strange was its vastly intricate ties to financial markets through the thousands of smaller companies under its international umbrella--its collapse could literally have resulted in a kind of financial doomsday. After $170 billion in federal injections, it's no surprise that the $165 million worth of bonuses awarded to AIG executives has become the source of public outrage. To top things off, AIG used an astonishing $50 billion of bailout cash for bank payments, many of them to foreign entities, according to Bloomberg. It's an amount the company attempted to keep secret until mounting pressure forced it out following the company's first quarter loss of $61.7 billion, the biggest quarterly loss in U.S. history.[21] The company said the increase includes $455 million of net income attributable to AIG, $12.1 billion of unrealized appreciation of investments, $2.1 billion from a draw-down of the Department of the Treasury commitment related to the Series F Fixed Rate Non-Cumulative Preferred Stock, partially offset by a $350 million reduction in non-controlling interests. AIG rebranded its insurance business as Chartis last July.[17] Net income for non-life reinsurance was $160.3 million compared with a loss of $553.6 million. Insurance and reinsurance companies are closely watched for their assessments of markets and the economy because they generally invest large sums of premium capital. Hannover Re said its investments "developed satisfactorily" during the first nine months with its portfolio of assets rising by $2.4 billion to $32.2 billion. British Airways PLC The airline reported a net loss of $346 million in the six months ending in September as the global economic downturn continued to take its toll on revenues.[5] 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.[19] Net income available to common shareholders was 92 million U.S. dollars in the third quarter, compared with a loss of 24.47 billion dollars during the same quarter last year.[22]
NEW YORK — Bailed out insurance giant AIG on Friday announced a profit of 455 million dollars in the third quarter, a massive turnaround from a 24.4 billion dollar loss in the same period last year.[23]
General Insurance recorded net premiums written of $8.1 billion in the third quarter, a 13% decline in sales compared to last year's third quarter.[7] Net premiums written in AIG's general insurance business, which was rebranded in July as Chartis, rose 2 percent from the previous quarter to $8.08 billion, providing further signs that AIG's core insurance business is stabilizing. Rising claims in the division though weakened its profitability between the second and third quarter.[19] Chartis, AIG'''s renamed general insurance operation, reported third-quarter operating income of $722 million, compared to $105 million in the 2008 third quarter, primarily due to positive partnership income.[4] AIG reported that the division posted operating income before net realized capital gains (losses) of $722 million in the third quarter of 2009, compared to $105 million in the third quarter of 2008, reflecting improvement of $612 million in net investment income, primarily due to positive partnership income.[17] "For the third quarter ended September 30, 2009, AIG reported net income attributable to AIG of $455 million, including net income attributable to AIG common shareholders of $92 million.," it said.[24]
Net income was $455 million, compared with a loss of $24.47 billion, in the year-earlier quarter. Its profit in the second quarter was $1.8 billion.[13] AIG posted a profit of $455 million, or 68 cents a share, compared with a year-earlier loss of $24.47 billion, or $181.02 a share.[1] Including the government's portion of the profit, AIG earned $455 million, or 68 cents per share, during the latest quarter.[19] Investors' initial reaction to the report is negative, as AIG shares are down about 6 percent in premarket trading. The insurance giant on Friday said its profit available to common shareholders totaled $92 million, or 68 cents per share.[25]
Adjusted to exclude initial public offering and acquisition-related charges, the firm reported a profit of $275.3 million, or 25 cents per share, compared with a loss of $502.6 million, or 45 cents per share, last year.[5] On the pretax level, BA reported a loss of $485 million compared with a profit of $86.3 million a year ago. Though worse than the consensus of analysts' expectations for a $418.5 million loss, shares in BA rallied 6.6 percent in midday London trading to 198.5 pence as the company laid out its plans to cut costs further and reduce capacity. "On balance, BA's determination to cut its closts has been well received by the market, with the shares having posted a 26 percent gain over the last year," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.[5]
Royal Bank of Scotland Group PLC The government-controlled bank reported a net loss of $3 billion despite an improvement in underlying profits and said lending to small- and medium-sized companies increased 5 percent. Full recovery from its near collapse a year ago will take years, said its chief executive, Stephen Hester.[5]
American International Group (AIG), the insurer that survived the credit crunch thanks to a $121 billion Government bailout, reported a second consecutive quarterly profit after writing back up the value of some assets.[18] As credit markets improved in the second quarter, asset values rose dramatically, giving AIG the shot in the arm it needed to end a string of seven straight quarterly losses. It posted a second-quarter profit of $1.8 billion.[6]
Asset sales speeding up: An improving credit situation helped AIG sell off $3 billion of assets in the quarter, more than doubling the number of assets it sold in the first half of 2009. The company said it will use the proceeds of those sales to repay its federal loans.[3] AIG was bailed out by the government in September 2008 at the peak of the credit crisis. It has since received aid packages with a total value of more than $182 billion. It has been working for the past year to sell assets and streamline operations to repay that debt.[25]
Asset sales to repay the government, AIG said, are expected to generate $5.6 billion after taxes and talks are underway with potential buyers of other businesses.[4] The company was in trouble after backing trillions of dollars in risky financial products amid a U.S. home mortgage meltdown that triggered a global financial crisis. The latest quarterly figures showed revenues fell 11.8 percent to 26 billion dollars as AIG sold off some or wound down of its operations. AIG said it "continues to make progress on its disposition plan," having entered into agreements to sell or completed the sale of operations and assets to generate a total of 5.6 billion dollars.[23]
Troubled asset portfolio shrinking: AIG made more progress winding down the sizeable financial products division portfolio that brought it to the brink of collapse in September. AIG has managed to reduce FP's derivative portfolio by 28% in 2009, reducing those holdings to $1.1 trillion. That's $200 billion lower than the size of the troubled asset holdings in the second quarter.[3] AIG, which had about $19 billion in private-equity and hedge fund holdings as of June 30, probably earned about $700 million from the assets in the quarter, Gallagher said.[16]
'''The negative impact of the economy on the insurance market increased in the third quarter.''' AIG propped up its International Lease Finance Corp. plane- leasing unit, the biggest customer of Boeing Co. and Airbus SAS, by extending $2 billion in credit last month.[16] NEW YORK (Bloomberg) - American International Group Inc., the bailed-out insurer with a $355 billion fixed-income portfolio, may report gains from the rally in corporate bonds and mortgage-backed securities in the third quarter.[16] American International Group Inc. (NYSE:AIG) reported a profit of $455 million in the third quarter, but it didn't hold a conference call.[7] American International Group, helped by accounting changes, posted a $455 million profit in the third quarter, its second period in the black, but management said it expects '''continued volatility''' for earnings.[4]
Continuing in the black for the second straight quarter, American International Group (AIG) has posted profits to the tune of $455 million for three months ended September quarter.[24] American International Group Inc. (AIG) posted its second straight profit in the third quarter, beating analysts' forecast, as the giant government-controlled insurer, plagued last year by massive write-downs in the financial-products division, instead posted write-ups there.[26] The rehabilitation of AIG, the insurer bailed out by the U.S. government, continued as it posted its second consecutive quarter of profits, helped by the stabilisation of credit markets. The rehabilitation of American International Group, the insurer bailed out by the U.S. government, continued as it posted its second consecutive quarter of profits, helped by the stabilisation of credit markets.[27]
American Int'l Group, Inc. ( AIG ), the insurer that has received $182.3 billion of federal aid and is now 80% owned by U.S. taxpayers, posted its second straight quarterly profit on Friday.[9]
NEW YORK (Reuters) - AIG, the giant insurer bailed out by the U.S. government, posted its second straight quarterly profit, helped by recovery in the value of its investments, but its underlying business remained weak and its shares fell. "It is clearly still a troubled company," said CreditSights analyst Rob Haines. "Its operations are clearly weaker than some of its higher quality competitors. AIG used to be one of those companies."[13] The insurer has received aid packages with a total value of more than $182 billion from the government, from which the government has received an 80 percent stake in the company. Shares of AIG are off its 52-week highs of $56 a share.[11] Excluding investments and the government'''s stake, AIG's adjusted third-quarter profit was $1.9 billion, or $2.85 a share.''[9] In total, the firm has received $182.5bn of government funding. The $92m in net profit was what is available to its shareholders. Including the government's share as a result of its stake, AIG earned $455m in the quarter.[28]
AIG lost $24.47 billion, or $181.02 per share, during the year-ago quarter when it was rescued from near collapse by the government.[25] Without the charge, AIG would have earned $1.9 billion in the quarter, or $2.85 per share.[3]
AIG (NYSE: AIG ) announce that their income has risen to $455 Million or $0.68 per share which improved from the previous year's losses of $24 million.[29] The $455 million third-quarter income represented 68 cents per share, compared with a loss of $24.5 billion or $181.02 per share for the period in 2008.[4]
The company had an unrealized gain on the securities of about $870 million at the end of the third quarter, according to a filing yesterday, compared with a loss of $15.4 billion on March 31.[16] Third-quarter net premiums written were $8.1 billion, a 13 percent decline compared to last year'''s third quarter.[4] In the non-life reinsurance business, gross written premiums increased nearly 17 percent in the third quarter to $1.9 billion from $1.6 billion in the third quarter a year ago.[5]
During the third quarter of 2009, the derivative portfolio was reduced 13 percent from approximately $1.3 trillion at June 30, 2009. Benmosche did warn, however, that while AIG remains focused on "stabilizing and strengthening" its businesses," there will be future "volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities.[17] "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," AIG CEO Robert Benmosche said in a statement.[22] AIG has received up to $180 billion of federal aid, including more than $80 billion in loans, and is now 80 percent-owned by U.S. taxpayers. "We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters," said Chief Executive Robert Benmosche, in the earnings statement.[13] AIG has secured agreements to raise more than $12 billion by selling businesses including a U.S. auto insurer, an equipment guarantor and a Taiwan-based life unit. Chief Executive Officer Robert Benmosche, who took the post in August, said he wouldn'''t be hurried by regulators to sell units at unfavorable prices.[16]
American International Group, or AIG as it is widely known, is drawing down $4.2 billion in additonal funds the Treasury Department. The government-supported insurer is using the funds to assist in restructuring its loss-making mortgage guarantor and the plane unit it wants to sell. AIG drew down the first tranche of $2.1 billion from its Treasury facility two months ago.[30]
The group generated operating income of $1.4 billion for the quarter, up from more than $8 billion in operating losses during the same quarter last year. That unit continues to make progress in resolving its derivatives portfolio, though its notional value still stood at $1.1 trillion, down from $1.3 trillion during the quarter that ended in June and $1.6 trillion at the end of December 2008.[20] The bank booked impairment losses of $5.5 billion, up from $2.2 billion a year earlier. Impairments for the first three quarters of this year rose to $17.9 billion. Without those charges, operating profit rose 55 percent to $2.8 billion.[5] AIG lost nearly $100 billion that year. The company lost an additional $4.35 billion in the first quarter of this year but followed that up with its first profitable stretch since 2007, posting a $1.82-billion second-quarter profit this summer.[8]
The government saved AIG last year through a series of bailouts -- worth more than $100 billion -- and owns nearly 80% of the company.[2] Realized losses on investments narrowed to $1.8 billion from $15.1 billion a year earlier as the markets for corporate debt and mortgage-backed securities improved. All told, AIG'''s progress from this point forward depends primarily on how the economy will perform, along with the hope that the government doesn'''t pull the plug.[9] "As I have repeatedly said, the journey will take some years." RBS announced earlier this week that it had agreed terms for joining the government Asset Protection Scheme to guard against losses of up to $468.6 billion on toxic assets. That move will boost the government's stake from 70 percent to 84 percent. The agreement calls for RBS to dispose of 318 branches, or 14 percent of its British network, within four years.[5] Assets under management slipped 3 percent during the quarter to $96.3 billion, from $99.7 billion a year ago.[5]
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.[19] There were positive signs of recovery. AIG noted that business retention was at its highest level since September of 2008, new business written exceeded $1.1 billion for the quarter, and pricing remained stable.[17] The derivatives business posted operating income of about $1.4 billion as many of the securities in the co.' s portfolio''rebounded compared with a loss of $8.3 billion a year earlier. The downside on that operating income is that nearly a billion of this is unrealized gains because these securities are still in AIG's credit-default swap portfolio.[9] Net income for the three months to September was $92m, compared with a loss of $24.5bn in the same quarter last year - when it was bailed out.[28] General Insurance reported operating income of $722 million, up from $105 million in the quarter last year, driven mostly by investment income, as premiums fell 13%.[1] Life insurance and retirement services had a 16 percent drop in premium income. The general insurance and life insurance divisions both had operating profit in the quarter, driven by higher net investment income, compared with losses a year earlier.[6]
Life insurance and retirement services came in at $7.9 billion, down 16.1% from the third quarter 2008 but relatively flat with the first two quarters of 2009, as businesses continue to stabilize.[9] AIG said it plans to record a US$5 billion charge in the fourth quarter as it proceeds with spinning off two major life insurance businesses.[31]
In August, AIG reported that it had returned to profitability after six straight losing quarters, a stretch in which the company lost more than $100 billion.[3] Excluding realized gains and losses, AIG's adjusted third-quarter profit was $1.9 billion, or $2.85 a share. On that basis, four analysts on average expected $1.98 a share, according to Thomson Reuters I/B/E/S.[6] Excluding special items, the profit was 2.85 dollars per share, compared with a market forecast of 1.98 dollars per share. It was the second consecutive quarterly profit for American International Group after the prior quarter's earnings of 1.8 billion dollars.[23] Our national insurance company reported earnings today and it's having a bit of trouble, uh, selling insurance. That didn't stop it from posting a profit, however! Indeed, American International Group reported its second consecutive quarter in the black, thanks to increasing value of assets on its balance sheet, which it can write up as a gain and trot out to investors thanks to accounting rules.[20] American International Group Inc., the insurance giant whose near-collapse last year prompted a massive federal bailout, posted its second consecutive quarterly profit Friday as certain units continued to stabilize and improved credit markets boosted the company's bottom line.[8]
"We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters." AIG said it was continuing to shrink the number of trades and outstanding exposures at its troubled Financial Products unit, whose complex credit derivatives contracts nearly destroyed the parent company last year and led to government intervention.[8]
Benmosche said AIG's executives are carefully monitoring commercial rates, and that AIGFP - the investment unit that triggered the company's deterioration - had been restructured. He said, "virtually all key risk measures are down significantly and the earnings again benefited from a positive unrealized market valuation gain on the Super Senior Credit Default Swap portfolio." Just how large AIGFP's commitments were was explained in a later entry of the earnings report, which noted that the unit had reduced the notional amount of its derivative portfolio by 28 percent from approximately $1.6 trillion at Dec. 31, 2008, to approximately $1.1 trillion at Sept. 30, 2009.[17] The company said it cut AIG FP's derivative portfolio by 13 percent in the quarter to about $1.1 trillion.[6] AIG said today that AIG PF's derivatives portfolio had been cut down to $1.1 trillion by the end of September, from $1.3 trillion in the previous quarter. Its trading positions were reduced by 12 per cent to 20,000.[18]
Shares of AIG fell $3.80, or 9.7 per cent, to close at US$35.48 in trading on the New York Stock Exchange.[31] Shares of AIG fell 3.80 dollars, or 9.67 percent, to 35.48 dollars on the New York Stock Exchange.[22]
AIG shares fell $2.53, or 6.4% to $36.75 at 7:09 am in early New York trading.[15] Shares of AIG ( AIG, Fortune 500 ) tumbled 9% in morning trading to $35.70. AIG's stock, which has nearly tripled since March, is down about 25% from its highs of around $50 in mid-September.[3] Shares of AIG fell $3.67, or 9.3 percent, to $35.61 in afternoon trading.[5] Shares of AIG fell $3.71, or 9.5 percent, to $35.57 in late morning trading.[19]
AIG shares, after rising more than 8 percent on Thursday, were down nearly 11 percent in premarket trade at $34.98.[6]
The primary contributor to the increase in net income was a positive investment return of $2.06 million, or $0.79 per diluted share, in the quarter.[32] Adjusted earnings, which excludes the government's stake and realized investment gains and losses totaled $385 million, or $2.85 per share.[19] Adjusted earnings, which excludes the government's stake and realized investment gains and losses totaled 385 million dollars, or 2.85 dollars per share, compared with a market forecast of 1.98dollars per share.[22]
Analysts polled by Thomson Reuters, on average, forecast earnings of $1.98 per share for the quarter.[19]
Net profit was $455m, or $0.68 a share, compared to a loss of $24.47bn in the same quarter in 2008.[33] The result follows a profit of $1.8bn in the last quarter, which was the first quarterly profit AIG had posted since the third quarter of 2007.[27] During the second quarter, AIG's profit available to common shareholders was $311 million.[19]
Kenneth Feinberg, the Government's Pay Czar, said last month that the highest-earning executives at AIG, and six other companies that received extraordinary Government aid, could not be paid more than $500,000 in cash every year. AIG's top dozen earners will see their cash payments fall by 91 per cent under the compensation chief's rules. He also rejected AIG's plan to pay other types of compensation worth more than $1.5 million to some AIG executives.[18] AIG'''s loan to ILFC helped push the insurer'''s draw on a Federal Reserve credit line to $44.8 billion, the highest since May. AIG also paid down debt on a government commercial paper facility using its Fed line.[16] Faced with huge defaults on the derivates, AIG was forced to take a $38.8 billion loan from the Government and provide $44 billion in financing to buy impaired assets from AIG's books.[18] AIG still owes the taxpayers $89.3 billion after receiving $131.6 billion of a possible $182 billion bail out fund. AIG still holds large amounts of troubled assets that they are trying to sell in an effort to pay off the government.[29]
AIG'''s bonds available for sale were valued at about $355 billion on June 30, and comprised more than half the insurer'''s $619 billion of invested assets.[16] In the first nine months and through October, the insurer decided to sell or complete sale of assets and operations, that would generate proceeds worth $5.6 billion.[24]
The insurer was rescued in September 2008 with a package that swelled to $182.3 billion, including a $60 billion Federal Reserve credit line, a Treasury Department investment of as much as $69.8 billion, and up to $52.5 billion to buy mortgage-linked assets owned or backed by the insurer.[16] The $182.30 billion bailout includes a line of credit of $60 billion from the Federal Reserve, $52.5 billion to purchase mortgage-backed securities issued or guarenteed by AIG, and a Treasury underwriting of $69.8 billion in two facilities.[30]
Almost 60 percent of AIG'''s bond portfolio as of June 30 was in corporate debt and securities tied to residential mortgages. '''They'''re going to get a big pop on a mark-to-market basis and have higher earnings,''' said Haag Sherman, who helps oversee $7.5 billion as chief investment officer of Houston-based Salient Partners. '''It'''s a modest positive, more about the vicissitudes of the market than the sustainability of their recovery, which is still in question.'''[16] AIG held more than $50 billion of municipal debt as of June 30. AIG pleaded successfully in February for its fourth bailout by saying it is the largest corporate bond investor in the U.S. and that its commercial insurance operation was the No. 2 holder of municipal debt.[16]
With $182.3 billion in bailout capital propping up the insurance giant, AIG's largest shareholder is, well, the American taxpayer. It should also be noted that other bailout recipients, including Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC), still hold conference calls and Web casts, in addition to posting earnings information on their Web sites.[34]
AIG's latest earnings report marked a significant departure from March 2, when it reported a staggering $61.7-billion loss for the fourth quarter of 2008, the largest quarterly loss in U.S. corporate history.[8] Of that, AIG owes the U.S. government $85.66bn in loans and interest. The remaining aid is tied to the value of some of the toxic assets that the government bought from AIG, where the government recoups more money if their value rises.[28] Since September 2008, U.S. taxpayers have put up to $180 billion at AIG's disposal, including more than $80 billion in loans.[6]
MetLife Inc., the largest U.S. life insurer, said that $15.4 billion in unrealized losses on corporate bonds reversed in the six months ended Sept. 30.[16] The beleaguered insurer, which has received U.S. taxpayers' money worth billions of dollars, had swung into profits in the second quarter, after six consecutive quarters of losses.[24]
Insurer AIG, which was saved by the U.S. government last year, has reported its second straight quarterly profit.[28] NEW YORK — AIG says it was profitable for the second straight quarter as its core insurance operations continue to stabilize after being bailed out by the government last year.[25]
Mr. Benmosche said the firm is '''turning away some renewal business due to aggressive pricing by existing and new competitors.''' Its general insurance third quarter combined ratio, the company said, had deteriorated by to 105.2 compared to 104.5 for third-quarter 2008, with some of the deterioration reflecting adverse development from prior accident years.[4] Premiums written in the general insurance business fell 13 percent from the third quarter last year.[19]
New business in the life insurance and retirement services division dipped 3 percent between the second and third quarters.[19]
For AIG's general insurance business, recently branded as "Chartis," net premiums written were down 13% from last year. The company said business retention was at its highest level since the company's near collapse in September 2008, and pricing remained stable. Life insurance premiums fell 16.1% from the same period last year, but the company said written insurance has remained flat this year as business stabilized.[3] AIG's general insurance operations reported a 13 percent decline in net policy sales.[6]
"Theoretically there's supposed to be enough assets that it can repay the government," said Cathy Seifert, an equity analyst at Standard & Poor's. It still remains to be seen if AIG's operations are worth as much as it owes the government, she added. AIG is relying on improvement at its core insurance subsidiaries to generate profit to repay the government.[5] AIG has been working for the past year to sell assets and streamline operations in an effort to repay the government debt.[19]
In total, AIG can call on $182.3 billion in assistance from the Government, of which it has used $120.7 billion. [18] Trimming down the outstanding balance of AIG's government bailout to $120.6 billion at the beginning of September.[7]
As of 30 September, AIG's outstanding assistance from the government was $122.31bn, down 4% from the previous quarter.[28] AIG was able to reduce the amount of money it owes the government during the third quarter.[19] "AIG employees are working to preserve the strength of our insurance businesses in a challenging market by working closely with our distribution partners, with third quarter 2009 showing signs of stabilisation," AIG's President and CEO Robert H Benmosche said.[24] AIG's overall combined ratio rose during the third quarter: 105.2 for general insurance; 106.4 for commercial insurance and 103.4 for foreign general insurance.[17]
"With our result for the third quarter we have secured a very good foundation and are in a position to raise our profit target for the full financial year," chief executive Ulrich Wallin said.[5] Third quarter 2009 underwriting losses were primarily driven by credit crisis related claims and continued adverse development of prior accident year loss reserves.[17] The gains in the latest quarter included improvement in the value of securities held by AIG Financial Products, basically a reversal of the losses that were the primary driver in AIG's near collapse last year.[13] Total catastrophe losses and major claims stood at $293.9 million in the nine months to Sept. 30, compared with $660.5 million in the same period last year.[5] The union is currently conducting a strike authorization vote, with results due on Dec. 14. In its statement, BA said revenue fell 13.7 percent to $6.8 billion from $7.8 billion a year earlier but that it had benefited from a 17.8 percent drop in fuel costs compared to last year as a result operating costs were 8.7 percent lower.[5] Tony Shepard at Charles Stanley & Co. sensed that BA "could be at a turning point," having achieved major cost savings. "there are still important issues on pay, productivity and pensions to be resolved as well as the usual risks of investing in airline shares," said Shepard, who kept his rating at "hold." BA's chief executive Willie Walsh said the company "can't stand still" with revenues likely to be $1.7 billion lower this year and that further cost reductions were essential" He said BA intended to cut the equivalent of 3,000 jobs by March and reduce winter capacity by 6 percent.[5]
Expenses fell 10 percent to $3.07 billion, from $3.39 billion last year.[5]
For the three months ending Sept. 30, RBS reported total income of $11.8 billion, compared with $14.3 billion a year earlier.[5] "We believe the worst is behind us, though a recovery could be gradual and uneven," Schwarzman said. He said there are many investment opportunities available now. The company said $1.3 billion had been committed, but not yet deployed, to deals in its corporate private equity unit as of Sept. 30. It is also considering opportunities several initial public offerings. There has also been an increase in potential deals in its real estate segment.[5] Sales for the New York-based company rose 189% to $26 billion, topping analysts' forecasts of $23 billion.[3] Sales at property-casualty operations fell about 13% to $8.07 billion.[15]
Total revenues for the quarter ended September 30, 2009, consisting of product sales, were $73,000 compared to total revenues of $27,000 for the same period in fiscal year 2009.[32] Analyst estimates typically exclude one-time gains and charges. Blackstone's revenue turned positive, to $597 million, from negative revenue of $160.3 million in the year ago quarter amid deterioration of its vast real estate holdings.[5] Part of the results include a one-time charge of $1.5 million used for the restructuring and hedging of the company's assets.[29] Results included a one-time net charge of $1.5 billion for capital losses and hedging.[3] The latest results included $1.8 billion in capital losses, while the previous year's results included billions in write-downs from credit-default swaps and $15.06 billion in capital losses.[1]
Excluding capital losses and hedging activities that don't qualify for hedge-accounting treatment, the profit was $2.85 in the latest quarter.[1] Aastrom Biosciences, Inc. (Nasdaq: ASTM ) reports a Q1 loss of $0.02 compared to a $0.03 profit for the same period last year.[32] The first-half net loss compared with a loss of $69.7 million a year earlier.[5] Net Interest Income for Q309 was $12.25 million, compared to $11.05 million for the same period in 2008.[32]
The insurance giant bailed out by the U.S. government reports third-quarter earnings of $455 million.[8] The insurer has received aid packages with a total value of more than $182 billion from the government.[19] The bank said it was meeting commitments demanded by the government to increase lending. Gross lending so far this year totals $23 billion, including more than $3.8 billion to first-time buyers.[5] The outstanding balance of AIG's government bailout, including government support of all types, stood at $120.6 billion at the beginning of September, out of total authorized assistance of $182 billion.[1]
As of Sept. 30, 2009 AIG's total equity was $76.5 billion, a $14.4 billion increase from $62.1 billion at June 30, 2009.[17] AIG'''s total balance outstanding from the Fed Commercial Paper Funding Facility was listed $9.6 billion among AIG Funding, Inc., Curzon Finance LLC and Nightingale Finance LLC.[4]
The AIA and Alico IPOs will happen in the fourth quarter of 2009, resulting in a $25 billion reduction in the balance and amount available under the FRBNY Facility.[7] The division underwrote $7.85 billion in premiums and other considerations during the most recent quarter.[19] Revenues in the quarter surged 189% to $26 billion, topping consensus estimates of $23 billion.[35]
Life insurance premiums and other considerations dropped 16% to $7.85 billion.[15] On the shareholder front, S&P's Seifert stresses that there are other problems at AIG besides the financial products division. She finds the weakness in AIG's core property-casualty and life insurance businesses somewhat concerning.[20] It is also unwinding its AIG Financial Products (AIG FP) division, which was blamed for causing the company's near-downfall after selling insurance on billions of dollars' worth of high-risk credit-backed derivatives.[18] While we're on the topic, we might as well mention that the AIG's Financial Products unit, which actually was the source of the derivatives that nearly sunk the company, posted good results during the last quarter.[20] Why? Because for the second straight quarter, the company has opted not to host a conference call. "We will provide ample information on our financial results on Friday, and we will be happy to answer questions on our results once they are public," Christina Pretto, a spokeswoman for AIG, told Bloomberg in an e-mail.[34]
American International Group (AIG) said Friday that it was profitable for the second consecutive quarter, as the stabilisation of credit markets helped improve results.[33] NEW YORK ( TheStreet ) -- American International Group ( AIG Quote ) swung into its second quarterly profit as the value of its investments slowly improves.[10] NEW YORK, Nov. 6 (Xinhua) -- American International Group Inc., the troubled insurance giant, said Friday it was profitable for the second straight quarter.[22] American International Group may be a shadow of its former self but for the second straight quarter it has posted a profit.[17]
American International Group Inc shares, which rallied on Thursday ahead of the earnings report, fell sharply in premarket trading, despite results that topped Wall Street expectations.[6]
Excluding $1.95 billion in special gains, the flailing insurer actually earned $2.85 a share, easily topping Wall Street's forecast of $1.98 a share.[10] The scant signs of progress helped push AIG shares down 9.8% at $35.44 recently.[1] AIG shares have been extremely volatile since the company was bailed out last year.[19] AIG was initially rescued in September last year to protect banks that bought derivatives from the insurer from losses.[30] Once the world's largest insurer, AIG nearly collapsed under massive losses and collateral demands from credit default swaps sold by AIG FP.[6]
Once the world's biggest insurer, AIG was on the brink of bankruptcy in September 2008 when the government offered a financial lifeline in exchange for an 80 percent stake in the company.[23] AIG was the largest single recipient of U.S. bailouts with the government pumping more than 170 billion dollars into the firm to keep it afloat and taking a controlling stake in the group in the process.[23] A government report in September showed AIG still owed nearly 121 billion dollars in taxpayer aid.[23]
AIG may post a $2.39-a-share operating profit tomorrow, when it is scheduled to release third-quarter results, according to the average estimate of three analysts surveyed by Bloomberg. [16] Profit at the life-insurance division more than doubled to $2.2 billion as assets under management rose in an improving market.[1]
The company has received $180 billion of federal aid and is now 80 percent-owned by U.S. taxpayers.[6] The return to more solid footing also put the company in a better position to pay back the $89.3 billion it owes taxpayers.[3]
If the shares can rebound from today's drop, we see overhead resistance around the $44-$46 price levels. We do not currently rate this former dividend-paying stock, but we do follow the company closely.[11] Shares hit a low of $6.60 in March, rose as high as $55.90 in late August, helped in part by a reverse stock split, and then slipped again. "It's a casino gamble," Blum said of the stock.[19]
In the year-earlier quarter, it had a $68.40-a-share operating loss on derivatives, adjusted for a reverse stock split.[16] The stock has traded between $3.55 and $17.22 in the past 52 weeks, and has more than doubled since the start of the year.[5]
Len Blum, a managing partner at investment bank Westwood Capital, said "there is still tremendous risk" to owning the stock. AIG is still on very shaky footing because of the amount of changes it is undergoing and continued uncertainty about exactly how much it will be able to raise from selling assets, he said.[31] On top of the market improvements, changes in how financial firms can value assets has helped AIG boomerang from the massive write-downs and charges that brought it to the brink of collapse."[20] AIG was rescued in 2008 after banks that bought protection on mortgage-linked assets drained the New York-based insurer of cash as the market value of the securities plunged.[16] The year-over-year decline can be partly explained by the weak economy, but it does also indicate that customers remain nervous about AIG's long-term health, Seifert said. That concern can further erode the value of the company, which can hurt the price it gets when selling assets, she said.[5]
Rob Haines, an analyst at CreditSights, said that despite signs of stabilisation, AIG still faced an uphill battle to recover. "It's going to take a while before the company is going to be operating near its historic norms," he said. Robert Benmosche, the former Metropolitan Life boss, came out of retirement to take as president and chief executive of AIG in August, after Government-appointed chief executive Edward Liddy asked to leave.[18] "Our results reflect continued stabilization in performance and market trends," said AIG Chief Executive Robert Benmosche.[35] "Expect continued volatility in reported results in the coming quarters," Mr Benmosche said. This would be because of restructuring charges, AIG said.[28] "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.[31]
BA did not break out second-quarter results. It reported a net loss of 106 million pounds in the first quarter. [5]
Revenue for the quarter was $51.58 million, which compares to the estimate of $52.86 million.[32] Revenues in the quarter were $597 million, topping consensus estimates of $451 million.[36]
Mr Liddy, who was working for no pay, was attached by lawmakers in April for allowing the payment of $165 million in retention bonuses to AIG FP workers.[18] Management and advisory fees, however, fell 18 percent to $367.6 million.[5] Blackstone shares rose $1.11, or 8 percent, to $14.98 in afternoon trading.[5] The flailing insurer warned that any recovery would be slow and choppy, sending shares tumbling 9.6% to $35.54 in afternoon trading.[10]
Analysts polled by Thomson Reuters, who typically exclude one-time events, forecasted earnings of $1.98 per share.[3]
AIG's shares fell 6.6% after chief Robert Benmosche warned the firm's run of profits may not continue.[28] Executives from AIG cited that the profits for the two quarters were due to the stabilization efforts in the mortgage industry and the credit markets. They also warn that the next few quarters may still be warped by volatility.[29]
Compared with the second quarter of 2009, some parts of AIG's property-and-casualty and life-insurance operations.[12] AIG said the decline was partially due to the effect of foreign exchange, the sale in 2008 of the unit'''s Brazilian operations, and a strategic decision to remain price disciplined, particularly in workers''' compensation.[4] Had the company been allowed to collapse, it may have had to liquidate holdings, disrupting markets, AIG said in a Feb. 26 document.[16]
There's a lot of work to do. AIGFP has exited many of its riskiest positions since back in March. It's worth noting that, according to a recent GAO report, at that time "the President of continued to believe that derivative positions of substantial magnitude still remained in force at AIGFP that could lead to billions of dollars of losses and a corresponding loss of taxpayer dollars invested the company in the form of equity and debt." To the extent that AIGFP is able to wind down any of its businesses that would likely increase the odds of Uncle Sam getting some of his money back. [20] Hannover Re said that provided the burden of catastrophe losses and major claims remains within the anticipated bounds at the non-life reinsurance business, "a very healthy profit contribution can be expected. "All in all, the life and health reinsurance business group should also deliver a very good profit contribution to total business," the company said in its report.[5]
Hannover Re said that due to an unremarkable hurricane season, catastrophe losses in the third quarter were below average.[5] Third quarter 2008 underwriting losses were primarily driven by catastrophe losses.[17]
The U.S. economy returned to growth in the third quarter after a yearlong contraction as government incentives spurred consumers to spend more on homes and cars.[16] Business volumes in the third quarter were down significantly from a year ago.[12] Gross lending was up 23 percent in the third quarter compared to the previous three months, RBS said. This copyrighted material may not be re-published without permission.[5] Hail and flood damage in central Europe, a Russian industrial fire and one marine claim led to expenditures of euro35 million in the third quarter.[5]
Significantly reduced catastrophe losses more than offset the reserve deterioration, fueling a 2.6-point improvement in the domestic commercial general insurance combined ratio, which came in at 106.4 for the quarter. [4] The insurer's general insurance and asset management businesses, although improving, still remain weak.[7] The insurer is shedding American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO, as it looks to repay the government.[19] "I think the most important takeaway is that the swap book did not blow up," CreditSights analyst Rob Haines said. "If that happens, then all this could be moot." AIG's general and life and retirement insurance businesses both were affected by the weak economic environment and lingering negative perceptions of AIG.[1] "AIG employees are working to preserve the strength of our insurance businesses in a challenging market."[35]
AIG in a statement today said the third-quarter profits were mainly on account of continuing stabilisation of certain businesses and "positive market valuation changes".[24]
Rattled by the financial meltdown, AIG got lifelines from the U.S. government to stay afloat.[24] AIG was bailed out by the U.S. government in 2008 and is now 80% state-owned.[28]
AIG was bailed out in September 2008 by the government as the financial crisis spiraled out of control.[19]
As the mortgage market begins a comeback, the value of the volatile credit-default swap insurance that AIG wrote on mortgage-backed securities increased.[3] Reinsurers sell back-up coverage to insurance companies to spread risk in the event of catastrophe or large claims. The company said it expects "a pleasing result" for 2009 in both its non-life and life-health reinsurance, with net premium volume to grow by around 30 percent.[5] RBS shares were up 1.9 percent at 35.87 pence on the London Stock Exchange. Hester said the results affirmed his confidence that RBS can recover as a strong company. "The results also show the headwinds we face and the legacy we are purposefully working out of," he said.[5]
The mortgage, credit and stock markets have all improved significantly in the year since AIG's government bailout.[1]
State and local government bonds returned 8.1 percent during the July-through-September period, the best quarter in at least two decades, according to Merrill Lynch'''s Municipal Master Index.[16] Investment-grade U.S. bonds returned 8.3 percent in the period, following 11 percent in the second quarter, the best gain since 1982, according to Merrill Lynch & Co., and some home-loan bonds reached prices almost double their March lows.[16]
Analysts estimates do not always include all charges a company might take throughout the quarter. [19] The troubled insurer said it continues to benefit from stabilization in the housing and credit markets, but future quarters will continue to be volatile.[3] Benmosche joined the insurer in August, becoming the fourth CEO at AIG since 2008.[6] Granted, earnings calls are usually uneventful. In this particular case, the absence of a conversation can be construed as fear on the part of AIG to be presented with questions it has no good answers to, or even to give outspoken CEO Robert Benmosche an easy outlet to air his quips.[34]
AIG is still on very shaky footing because of the amount of changes it is undergoing and continued uncertainty about exactly how much it will be able to raise from selling assets, Blum said. [19] FILE - In this March 17, 2009 file photo, an AIG office building is shown in New York.[19]
Diamond Hill Investment Group, Inc. (Nasdaq: DHIL ) reports Q3 EPS of $1.23 vs. $0.70 consensus - may not be comparable. [32] AIGFP reduced the notional amount of its derivative portfolio from $1.3 trillion on June 30 to approximately $1.1 trillion on Sept. 30.[7]
SOURCES
1. 3rd UPDATE: AIG 3Q Profit Driven By Investment Gains - www.capital.gr
2. Our National Insurance Company, AIG, Reports So-So Earnings - Planet Money Blog : NPR
3. AIG profitable for second straight quarter - Nov. 6, 2009
4. AIG Lists Third Quarter Net of $455 Million - Commercial Insurance & Reinsurance - Property and Casualty Insurance News
5. Friday's full corporate earnings reports | HeraldTribune.com | Sarasota Florida | Southwest Florida's Information Leader
6. UPDATE 3-AIG posts 2nd straight profit, insurance opns weak - Forbes.com
7. A closer look at AIG's earnings (Dealscape - Crisis On Wall Street)
8. AIG posts 2nd consecutive quarterly profit -- latimes.com
9. AIG Reports Better-Than-Expected Quarterly Profits
10. AIG Warns of Volatility; Shares Tumble | Earnings | Financial Articles & Investing News | TheStreet.com
11. Dividend Stocks The Dividend Daily » Blog Archive » AIG Shares Tumble Despite 2nd Straight Profitable Quarter (AIG)
12. More Profit For AIG, But Challenge Too - WSJ.com
13. AIG Posts Second Straight Profit - ABC News
14. AIG taps $2.1 bln from US for ILFC share purchase | Deals | Regulatory News | Reuters
15. AIG posts $455-m income on lower investment losses
16. The Royal Gazette
17. AIG Posts $455 Million Q3 Net Income; Stabilization Continues
18. AIG reports second quarterly profit - Times Online
19. The Associated Press: AIG posts 2nd consecutive quarterly profit
20. AIG Earnings: Accounting Write-ups Result in Profit - MarketBeat - WSJ
21. American International Group - FierceFinance
22. AIG keeps profitable for second quarter_English_Xinhua
23. AFP: AIG posts profit of $455 million
24. AIG posts 2nd straight quarterly profit
25. The Associated Press: AIG posts 2nd consecutive quarterly profit
26. CORRECT: AIG Swings To Third-Quarter Profit After Write-Downs - WSJ.com
27. Update Survivor AIG posts 2nd straight profit | 06112009 | Reactions - Global Insurance
28. BBC NEWS | Business | AIG posts second quarterly profit
29. AIG Reporting Profits For The Second Straight Quarter (AIG) | Benzinga.com
30. AIG continues to suck billions of dollars from Treasury
31. Metro - AIG posts 2nd straight profit amid signs of stabilization, CEO says earnings volatility ahead
32. StreetInsider.com
33. AIGs posts 2nd successive quarterly profit | 06112009 | Reactions - Global Insurance
34. Why isn't AIG hosting an earnings call? (Dealscape - Crisis On Wall Street)
35. AIG Posts Second Straight Quarterly Profit of $455 million as Investment Value Rises (AIG) - Comtex SmarTrend Alert
36. Blackstone Posts $275 Million Profit on LBO Action says "Worst is Behind us" (BX) - Comtex SmarTrend Alert
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