AIG Posts $2.7B Second-Quarter Loss

A one-time charge drove losses, but insurance remained profitable, and the company's adjusted profit beat Wall Street views.
Author:
Publish date:

NEW YORK (

TheStreet

) -- Insurance giant

American International Group

(AIG) - Get Report

swung to a loss in the second quarter after taking a $3.3 billion charge tied to the sale of its

Alico

life insurance subsidiary.

AIG reported a net loss in the second quarter of $2.7 billion, or $3.96 a share, down from earnings of $1.8 billion, or $2.30 a share, in the same period a year earlier.

On an adjusted basis, excluding certain items, AIG said it earned $1.99 a share. The average estimate of analysts polled by

Thomson Reuters

was for a profit of 99 cents a share in the June period.

Much of the loss is attributed to a goodwill impairment charge AIG took in the second quarter related to the sale of Alico, a foreign life insurance subsidiary. AIG sold the subsidiary to

MetLife

(MET) - Get Report

in March as part of its fund-raising efforts to repay the U.S. government for a $130 billion bailout, according to the

Wall Street Journal

.

AIG's property and casualty insurance unit -

Chartis

- reported second-quarter operating income of $955 million, compared to $1.0 billion in the second quarter of 2009. The AIG statement explained that unit experienced $287 million of catastrophe losses in the quarter tied to U.S. floods, Hurricane Alex, U.S. hailstorms and the Deepwater Horizon oil spill.

Overall, however, AIG earned $2.2 billion before tax in the second quarter from continuing insurance operations, compared to $1.5 billion in the second quarter of 2009.

AIG Financial Products Group, which was primarily responsible for losses during the 2008 financial meltdown, reported a $132 million operating loss in the second quarter. That loss was "flat" compared to the second quarter of 2009 and the group continued the process of "winding down" its operations, the AIG statement said.

"AIG's continuing insurance operating results remain solid, while the company continues to execute on its restructuring plans and prepares for separation from the U.S. government. Our overall strategy remains unchanged," AIG President and CEO

Robert Benmosche

said in a press statement.

AIG shares were up nearly 5% to $41.75 in morning trades.

--

Written by Christopher Westfall in New York

.