American International Group Inc. reported better-than-expected quarterly results on Friday and said it had started talks on disentangling itself from the U.S. government.
The insurer, which is nearly 80 percent-owned by the government after a $182.3 billion bailout, said that in recent weeks it began talks with the Federal Reserve Bank of New York, the U.S. Treasury Department and the trustees of the AIG Credit Facility Trust about a strategy to "allow the government to exit its owner relationship with AIG."
The company reported an adjusted profit of $1.3 billion, or $1.99 per share, for the second quarter, up from $1.1 billion, or $1.71 per share, a year earlier.
Analysts, on average, had expected 99 cents per share, according to Thomson Reuters I/B/E/S.
"Things were pretty stable," Morningstar analyst Bill Bergman said. "Stabilization doesn't mean growth and healthy growth, but it appears to be laying a basis for that."
AIG shares were up 2.4 percent in premarket trading.
AIG, once the world's largest insurer, nearly collapsed in September 2008 from credit default swaps that left it on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European banks.
It was rescued by the government and has been divesting assets to repay taxpayers, who are still owed more than $100 billion.
AIG reported a net loss to the company of $2.7 billion, or $3.96 per share, for the second quarter, compared with a net profit of $1.8 billion, or $2.30 per share, a year earlier.
The net loss was primarily due to a $3.3 billion noncash goodwill impairment charge related to the pending sale of its foreign life insurance unit, American Life Insurance Co.
AIG's general insurance unit, Chartis, reported operating income of $955 million before net realized capital gains, down from $1 billion a year earlier.
Chartis incurred $287 million of catastrophe losses in the quarter, including due to floods in the U.S. Southeast, the explosion at BP's Deepwater Horizon oil rig, and the Icelandic volcano.
"There is healthy, stable operating income in the general insurance operations," Bergman said.
U.S. life insurance and retirement services, called SunAmerica Financial Group, reported operating income of $1.1 billion before net realized capital gains, up from $254 million a year earlier.
"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," Chief Executive Robert Benmosche said in a statement.
Benmosche sees a future for AIG with Chartis and SunAmerica forming its core.
AIG's Asian life insurance business posted pre-tax operating income of $604 million, up from $314 million a year earlier. American International
Assurance, slated to go public after a failed sale to Britain's Prudential PLC, generated most of those earnings, helped by higher net investment income.
AIG Financial Products, the unit behind the insurer's spectacular downfall in 2008, reduced the notional amount of its derivative portfolio to about $602.4 billion at June 30, down 36 percent from the end of last year.
AIG shares are up 33 percent this year, outperforming the S&P Insurance Index, which is up 7 percent.
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