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Categorized | Insurance

AIG completes buyback as profits improve

Posted on October 31, 2013

AIG announced it had completed its first share buyback since its $182bn government bailout during the financial crisis, as the insurance group posted improved third-quarter profits on Thursday.

Net income rose to $2.2bn, or $1.46 a share on a diluted basis, in the third quarter, up from $1.9bn, or $1.13 a share, a year earlier.

    Operating profits, which excludes some investment results, were exactly in line with analysts’ expectations of 96 cents a share, down from 99 cents a share a year earlier.

    Insurance operations made operating income of $2.2bn, up 38 per cent on last year. The overall results were held back by the prior year’s inclusion of almost $1bn in one-time gains from changes in the fair value of assets.

    “AIG’s solid performance this quarter underscores the strong fundamentals of our businesses, and builds up the momentum that we generated in the first half of this year,” said Bob Benmosche, chief executive.

    The insurance group has slowly recovered from its near-failure in 2008, repaying the emergency infusion of funds from the US Treasury and Federal Reserve. It has now recorded its sixth profitable quarter in the last seven.

    AIG announced its first post-crisis dividend last quarter which it maintained at 10 cents a share. This quarter it added its first post-bail-out buyback, worth $192m.

    The company did not provide an update on the potential sale of ILFC, its aircraft leasing business, which it had announced had been acquired by a Chinese consortium before the transaction hit obstacles.

    A person familiar with the situation said AIG was continuing to prepare for an initial public offering for ILFC should the sale be definitively called off.

    Shares in the company fell 2.4 per cent in after-market trading to $50.40, after a rising of 46 per cent over the past year.