American International Group president and CEO Robert Benmosche said he will focus on improving the company's balance sheet and rewarding shareholders after the company reported strong earnings, although the company's property and casualty business' combined ratio remained over 100.

Benmosche also used the occasion of an appearance on CNBC last night to say that the U.S. financial system is “safer than we've ever imagined,” and he praised retiring Federal Reserve Board Chairman Ben Bernanke for doing “an outstanding job of taking us through this crisis, and if you look at this trust test that banks are dealing with, the de-leveraging that's happened.”

AIG took a $265 million severance charge against fourth-quarter earnings — the cost of cutting 3% of its workforce as part of a consolidation plan and a strategy to reduce the layers of management. Most of the cuts will be in property and casualty operations.

Excluding that, AIG earned $1.15 as compared to analysts' consensus estimate of 96 cents, and revenue of $4.62 billion vs. projected revenues of $4.56 billion.

Year over year comparisons were also strong, with full-year after-tax operating income per share of $4.56, up from $3.93 last year.

AIG reports net income of $1.97 billion, compared to a $3.9 billion net loss in 2012's fourth quarter. For the year, net income was $9.1 billion in 2013 compared to $3.7 billion in 2012, however analysts note that Superstorm Sandy impacted the prior year's results.

A contributing analyst to Seeking Alpha says the results showed improvement in P&C results, “a unit that has struggled over the past 24 months,” but adds that, while underwriting standards are improving, AIG still lags peers.

According to the company's results, AIG Property Casualty had a combined ratio of 103.8, and took an underwriting loss of $330 million, its steepest underwriting loss so far this year, but well under the 2012 fourth-quarter underwriting loss of $2.2 billion.

Pre-tax operating income at AIG Property Casualty was $1.1 billion.

A Seeking Alpha update this morning notes that some investment analysts were honing in on “continued weakness” in P&C in premarket action this morning.

In lauding Bernanke, Benmosche said he deserved recognition by CNBC as one of the 25 most influential business people over the last 25 years.

“I think Ben Bernanke stood up, and what was most important is, we needed somebody to make decisions in '08, however popular or unpopular, and make sure that we continued to stay focused on keeping this economy from stalling,” Benmosche said.

He called Bernanke the “unsung hero” of the period, adding that he “deserves an enormous amount of credit for just quietly taking the abuse and leading us to where we are today.”

As for AIG, Benmosche said he doesn't believe the firm “poses any threat to the financial system.”

He said the public negative sentiment about AIG “is down dramatically to levels lower than we've seen. And the positive is starting to move up, because people realize that AIG paid back America plus a profit, for about $205 billion.”

Benmosche added, “Many people thought AIG was finished.”

He also that AIG employs 30,000-plus people in America. “These are jobs, and all the jobs we have here at AIG, we create many more thousands of jobs for people who do business with AIG.

Speaking to potential acquisitions going forward, Benmosche said, “If we could find a good business for the right price…we'll use that money to buy a company that is something that will allow us to grow a little bit more rapidly in some of the countries we're doing business in.”

But other than that, Benmosche said, “We will just focus on good credit ratings, and then our shareholders.”

Special Reports /

AIG Q4 Net Income Climbs; Plans Job Cuts in P&C Operations

Related Stories

Recommended For You