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AIG's profit jumps to $17.80 billion for 2011


NEW YORK—American International Group Inc. had $17.80 billion in net income last year, a 128.6% increase from the amount earned in 2010, AIG reported Thursday.

Chartis Inc., AIG's property/casualty insurance unit, reported operating income of $1.11 billion in 2011 compared with a $1.07 billion loss a year earlier.

Chartis' net written premiums for 2011 reached $34.84 billion, a 10.2% increase over a year earlier. Chartis' combined ratio improved to 109.0% in 2011 from 116.8% a year earlier.

For the fourth quarter, AIG reported net income of $19.80 billion, a 77.1% increase from the same period of 2010. Chartis reported operating income of $348 million for the quarter vs. an operating loss of $3.97 billion a year earlier.

Chartis' net written premiums reached $7.85 billion for the fourth quarter of 2011, up 3.6% from a year earlier. Its combined ratio improved to 107.3% from 160.5% during the same period in 2010.

AIG noted that its net income reflects a U.S. consolidated income tax group deferred tax asset valuation allowance release of $17.78 billion for the fourth quarter and $16.56 billion for the full year.

“Think of it like capital gains or losses,” said an AIG spokesman in an email. “Because we had the losses we did, it means that when we earned income, we would be able to, in effect, credit the gains against the losses, so we wouldn't pay tax on the income.”

“That makes it a pretty valuable asset,” the spokesman said.

“As previously disclosed, AIG established a framework for assessing the recoverability of its deferred tax assets,” AIG said in a statement. “Based on the application of this framework, AIG concluded that it is more likely than not that a substantial portion of the deferred tax assets of the U.S consolidated income tax group will be realized, and therefore released the valuation allowance equal to that portion in the fourth quarter of 2011.”

“In 2011, we began to prosper once again,” AIG President and CEO Robert Benmosche said in the statement. “We have a high degree of confidence in our future earnings prospects, which is a critical element in our assessment supporting the release of the deferred tax asset valuation allowance.

“As we look to 2012 and beyond, we anticipate we'll continue to be competitive in all areas of our core insurance businesses,” Mr. Benmosche said.

Mr. Benmosche repeated his optimistic view during a Friday conference call discussing AIG’s performance.

“Our crisis is over; we had a good 2011,” said Mr. Benmosche.

Chartis CEO Peter Hancock said he was “pretty pleased” with Chartis’ fourth-quarter performance. While Chartis sustained $467 million in catastrophe losses during the quarter due mainly to flooding in Thailand, Mr. Hancock said he was “very proud” of how the property/casualty insurer’s claims personnel met the challenges.

He added that rates in the United States and Canada increased about 4% during the fourth quarter, with rates for workers compensation and property registering increases of about 8% during the period.