American International Group reported yesterday that its second-quarter net income dropped 29 percent as record property-casualty underwriting profits failed to make up for mixed life insurance results.
The New York-based financial services giant reported net income of $3.19 billion compared with $4.49 billion in the same quarter of 2005.
AIG Chief Executive Officer Martin Sullivan noted that general insurance posted record underwriting profits with a combined ratio of 86.47.
That figure represents a 5.41 improvement over the year ago number, primarily the result of an improved accident year ratio compared to 2005.
In addition, the underwriting performance reflects continued generally favorable pricing, policy terms and conditions, the company said.
General insurance net premiums written increased 9.3 percent to $11.63 billion in the second quarter of last year.
Morgan Stanley property-casualty analyst William Wilt wrote that earnings were good but "largely lacking in fuel for either an incrementally more bullish or bearish argument."
Most of the earnings upside came from U.S. commercial operations where the company beat his expectations in both top line numbers and combined ratio, Mr. Wilt wrote.
Life insurance and retirement services had a mixed quarter, with strong product results in domestic life and individual variable annuities and an "ongoing difficult sales environment in individual variable annuities lines."
Also this week, the company said in a statement it was selling its stake in IPC Holdings Ltd. through a share offer.
AIG provides IPC with investment management and administrative services and is launching a public offering to sell 13.4 million common shares of the Bermuda-based reinsurer.
IPC was one of eight property catastrophe reinsurance start-up firms that were set up in Bermuda in the aftermath of Hurricane Andrew in 1992.
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