American International Group reported a 51 percent jump in second-quarter net income fueled by strong gains in its foreign life insurance and retirement business.
Net income came in at $3.9 billion, compared to $2.65 billion in the comparable period in 2004.
Revenues for the period for the New York-based insurer rose 14.3 percent to $26.7 billion.
Company Chief Executive Officer Martin Sullivan in a conference call this morning refused to answer any questions relating to the regulatory investigations by the New York Attorney General's Office and Securities and Exchange Commission into alleged accounting fraud and complicity in brokerage bid-rigging.
In addition, he said he had not read former CEO Maurice Greenberg's white paper questioning the motives behind AIG's restatement earlier this year that lowered its net income by $4 billion.
Mr. Greenberg, who is facing civil and criminal investigations, said many changes in the restatement were unnecessary and exaggerated and designed to justify his ouster.
In its 10-Q form filed yesterday AIG said its International Lease Finance Corp. restated its accounts for the last five years to correct the way it accounted for derivatives. Mr. Sullivan said the restatement was not a part of the general financial restatement announced in May.
Williams Capital analyst Peter Streit called the second-quarter results "outstanding."
"They were much better than expected in domestic and foreign property-casualty and foreign life and retirement services," Mr. Streit said.
In addition, consumer finance also performed extremely well.
The company said property-casualty operating income increased 20.5 percent with a combined ratio of 92.4, with the foreign sector far out-performing the domestic with a 82.04 combined ratio compared to a 96.05 for the domestic.
The foreign life and retirement segment also contributed impressive numbers with Japan showing a first-year premium growth increase of 31.8 percent and total foreign annuity production rising 43.3 percent.
On the domestic life and retirement side, the strains of the investigation took their toll somewhat in the form of decreased sales volumes from some of their agencies. Mr. Streit attributed operating income growth of 5 percent and lower transactions volumes to increased wariness on the part of AIG agents in the aftermath of the restatement.
"However, in the last month of the quarter and in the month of July, AIG has seen that trend beginning to reverse," Mr. Streit said.
Other segments impacted by the investigations included capital markets that suffered from, according to Mr. Sullivan, "difficult market conditions and customer uncertainty during much of the quarter surrounding the negative ratings actions and the ongoing investigations."
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
