AIG Blows Out Quarter

  • American International Group reports second-quarter after-tax operating income of $1.9 billion, or $1.06 a share, beating the consensus estimate of a 57-cent profit.
  • Maiden Lane III loan from Federal Reserve Bank of New York paid in full.
  • $1.3 billion positve fair value adjustment for Maiden Lane III.
  • Insurance income grows 26% year-over-year, to $1.9 billion, after tax.

NEW YORK ( TheStreet) -- American International Group ( AIG) on Thursday reported second-quarter after-tax operating income of $1.9 billion, or $1.06 a share, beating the consensus estimate of a 57-cent profit, among analysts polled by Thomson Reuters.

In comparison, after-tax operating income totaled $1.2 billion, or 68 cents a share, during the second quarter of 2011.

AIG CEO Robert Benmosche said that the "performance of our businesses and our stock price enabled the U.S. government to continue to profitably reduce its outstanding assistance to AIG, which includes the U.S. Department of the Treasury's $5.7 billion AIG equity offering in May 2012," and also said that "the Federal Reserve Bank of New York's Maiden Lane III loan was also paid in full during the quarter."

AIG also announced that in July, "AIG's $5.0 billion equity interest in ML III was fully repaid along with contractual and additional distributions of $1.1 billion," and that "AIG will continue to receive 33 percent of proceeds generated by future sales of ML III assets."

The company's second-quarter results were boosted by a $1.3 billion positive adjustment in the fair value of Maiden Lane III, which was partially offset by a negative adjustment in the fair value of the company's investment in Asian insurer AIA Group, of $493 million.

AIG reported that after-tax operating income for its combined insurance operations was $1.9 billion during the second quarter, increasing from $1.5 billion a year earlier.

The company's Chartis subsidiary's second-quarter pretax income was $961 million, improving from $826 million a year earlier, mainly because of a decline in claims.

Sun America Financial Group's operating income increased 29% year-over-year, to $933 million.

AIG's shares closed at $30.84 Thursday, returning 33% year-to-date.

AIG Chart AIG data by YCharts

The shares trade for nine times the consensus 2013 EPS estimate of $3.30. The consensus 2012 EPS estimate is $3.62.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.