American International Group Inc. swung to a profit with second-quarter net income of $1.8 billion compared to a net loss of $2.7 billion for the second quarter a year ago.
Robert H. Benmosche, president and CEO of AIG—the beneficiary of a $182 billion bailout from the government in order to avoid collapse in 2008—tells CNBC that AIG has “turned the corner and our crisis is over.”
Benmosche reiterated the point during a conference call Aug. 10 to discuss earnings. “We’re independent of government support. Overall, we’re in great shape.”
Benmosche adds in a statement: “Our continued improving operating results should provide a catalyst for the U.S. Treasury to sell its shares at a profit for the taxpayers.”
The Treasury still holds a majority stake (about 77 percent) in the company after an $8.7 billion common stock offering—a “significant recapitalization milestone,” says the CEO in his statement—consisting of 100 million AIG shares and 200 million shares from the U.S. Treasury.
AIG’s property and casualty business, Chartis, reported operating income of $789 million compared to $955 million a year ago.
Second-quarter catastrophe losses were $539 million, including $348 million from tornadoes in the U.S. The losses “reflect no significant prior-year loss-reserve development,” AIG says.
Elsewhere in the industry, catastrophes continued to take their toll on second-quarter and half-year results, with Berkshire Hathaway saying it is unlikely that its combined insurance operations will post an underwriting profit this year. The Warren Buffett-led company reported a $7 million second-quarter underwriting loss.
Specialty-insurer and reinsurer Catlin says it suffered more than $500 million in catastrophe losses in the first half of the year, and its CEO says he expects more with the onset of the Atlantic hurricane season. The company reported a net loss to common shareholders for the first six months of $220 million compared to net income of $57 million for the same period last year.
Swiss Re, however, posted second-quarter net income of $960 million, compared to $812 million in the 2010 second quarter. In a conference call, CFO George Quinn says property and casualty results were “excellent,” as P&C operating income in the quarter was $993 million, compared to $455 million in the 2010 second quarter. Strong July renewals led to the operating income increase, but Swiss Re says the company also exercised disciplined underwriting. Lower large-loss experience in the quarter and favorable net development of prior accident years also contributed to growth.