Profit Slumps at AIG - TheStreet

Profit Slumps at AIG

Stock expenses offset a strong insurance performance.
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First-quarter profit shrunk at American International Group (AIG) - Get Report as stock compensation expenses and losses in Taiwan contributed to hindering the period's results.

The insurance and financial-services giant said late Wednesday that net income for the period ended March 31 fell to $3.2 billion, or $1.22 a share, from $3.8 billion, or $1.45 a share, a year earlier.

Excluding items, the company said "adjusted net income" rose 4.6% to $3.38 billion, or $1.29 a share.

A survey of analysts by Thomson First Call had produced an average earnings estimate of $1.36 a share.

Following the news, shares of AIG fell $2.34, or 3.5%, in after-hours trading to $64.20 on Instinet.

AIG said the quarter was hurt by charges of $115 million relating to expenses from the SICO compensation plans and the Starr tender offer, $57 million in additional allowances for credit card operational losses in Taiwan and a $38 million charge for an adjustment in deferred advertising costs.

The company said that operating profit before realized capital gains in its general insurance unit rose 42% to $2.26 billion. The relatively stable rate environment and the continuation of generally favorable policy terms and conditions contributed to the strong underwriting performance, the company said.