£1bn makes AIG AOK

May 8 2010 by Iain Laing, The Journal

US INSURANCE giant AIG returned to profit in the first quarter of 2010 as its investments brought in extra income.

American International Group, which is nearly 80% owned by the US government, made £1bn in the period, compared with a loss of nearly £3bn a year earlier. Chartis, the general insurance business, saw net premiums decline, but AIG said it was still up on the previous 12 months.

“We remain focused on further stabilising and strengthening our businesses while continuing our restructuring activities, closing the pending transactions, and developing plans to address our highly leveraged capital structure,” chief executive Robert Benmosche said in a statement.

Benmosche sees a future for AIG with the general insurance business, Chartis, and the US life insurance and retirement services business, SunAmerica Financial Group, forming the core, as AIG sheds assets to repay the US government after a £124bn bailout.

“I am pleased with their progress, but there is still more work to be done,” added Mr Benmosche.

AIG has agreed to sell two major foreign businesses to bolster its finances and put it in a position to repay some of the taxpayer-funded bailout.

But AIG’s plans to sell its Asian business AIA to UK group Prudential for £20bn were slowed after the Pru delayed a rights issue to fund the purchase.

AIG Financial Products, the unit behind the insurer’s collapse, reduced the notional amount of its derivative portfolio by 20% during the quarter, to £514bn at March 31. The number of trade positions in its portfolio was cut 11% to about 14,300.