AIG operating profit up, helped by cost cuts; shares riseReprints
(Reuters) — American International Group Inc. reported better-than-expected first-quarter operating profit on Wednesday, helped by investment returns and cost cuts.
AIG reported operating earnings of $1.37 billion compared with $765 million in the year-ago quarter, beating Wall Street’s average estimate.
Its shares rose 2% after hours to $62.90.
The New York-based insurer, which is the largest U.S. underwriter of commercial property/casualty insurance, also said its board authorized an additional $2.5 billion in share repurchases, putting the company closer to its goal of returning $25 billion of capital to investors by year-end.
That is a central part of a two-year turnaround plan underway at AIG, which has been the target of activist investors led by billionaire Carl Icahn. The company has returned $18.1 billion to shareholders through buybacks since announcing the plan last year.
The results mark a rebound from a surprisingly wide loss in the fourth quarter, which stunned investors and AIG’s board, triggering the resignation of Chief Executive Peter Hancock. Mr. Hancock said on March 9 he would depart once the board found a replacement.
Profit was also boosted by lower-than-expected catastrophe losses, better selection of commercial risks it insures and getting rid of legacy businesses, the company said.
“Our first quarter results highlight the success of the actions we have taken to execute on our strategy, strengthen our balance sheet, and improve earnings quality,” Mr. Hancock said in a statement.