In a conference call this morning, AIG Chairman Martin Sullivan said as the year progress, he expects special one-time charges will diminish, and analysts can focus on the company's underlying profitability.

Mr. Meredith noted that AIG's General Insurance combined ratio was significantly better than anticipated at 89.1, compared to his expectation of 92.3, “as the favorable accident-year combined ratio in 2005 carried over into 2006.”

However, while life insurance operating income was in line with expectations, “top-line growth continued to be a problem in both domestic and foreign life operations, with fixed-annuity sales declining offset by improvement in variable annuity and life insurance sales.”

While General Insurance enjoyed a more favorable than expected combined ratio, net premiums written in the segment grew by only 4.3 percent compared Bank of America's forecast of 7.8 percent. The same was true for personal lines premiums, which rose 1 percent compared to expectations of 8 percent.

On pricing, Mr. Sullivan said U.S. property and energy lines were seeing increases, and “we see that continuing until the end of the year.”

Casualty coverages, however, were flat to down, with the longer-tail lines suffering as much as a 10 percent decline, he noted.

Morgan Stanley analyst William Wilt was a bit less sanguine about the company's prospects following the earnings results, asserting that the stock price will probably be weak on the “heals of a disappointing quarter.”

“It seems unlikely that 2006 or 2007 earnings will revise upward until the company demonstrates it can fire on all cylinders,” he wrote.