AIG making ‘real money’ after $1.45bn profit – CEO

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CHIEF Executive Officer, American International Group Incorporated Mr. Robert Benmosche, who promised to rebuild the bailed-out insurer, told investors for the first time that the firm made ”real money” after a $1.45bn profit.

According to Bloomberg News on Saturday, Benmosche cited the first-quarter results as evidence that the New York-based firm was stabilising after housing-market losses forced it into a 2008 government rescue. Investment income surged on gains in private equity and hedge-fund holdings, and writedowns on securities narrowed to $309m from about $3.7bn a year earlier, AIG said on Friday.

“When you look at the pluses and minuses, they netted out to a quarter in which we made real money and we made real progress in positioning this company for the future,” Benmosche said in an audio statement on AIG‘s website. ”We are taking the right steps to ensure that we earn the confidence of the marketplace.”

Benmosche, 65, took charge in August of a company reeling from almost $100bn in 2008 net losses and a government rescue that swelled to $182.3bn. He told employees that month that he would rebuild AIG businesses before divesting them to repay taxpayers and then announced in March that he had struck deals to sell two non-United States life insurance divisions for about $51bn.

AIG advanced $1.95, or 5.3 per cent, to $38.70 in New York Stock Exchange composite trading on Friday, the second-biggest winner on the Standard & Poor‘s 500 Index. The firm has climbed by 45 per cent since Benmosche started on August 10. Profit excluding some investments was $1.21 a share, beating the average 48-cent estimate of two analysts surveyed by Bloomberg. In the year- earlier period AIG had a net loss of $4.35bn.

AIG‘s remaining businesses after the sales will include a global property-casualty insurer, two Japan units and a US life insurer and retirement services operation. Those businesses produced $2.2bn in pretax operating earnings in the first quarter, the company said. Benmosche used variations of the word “stable” at least six times in his audio address and a company statement.

“Over and over again, we hear the same thing: AIG is back,” Benmosche said, based on comments he said were made at an industry conference. ”We will continue to work hard on our goal to be the preeminent global property insurer,” he added.

Benmosche said AIG expected the sales of AIA Group Limited and American Life Insurance Company, the non-US life divisions, to be completed by the end of this year. “Our transactions are on track,” he said.

Prudential Plc, the British insurer that agreed to pay about $35.5bn for AIA, this week delayed a $21bn rights offering needed for the acquisition as United Kingdom regulators weighed the combined company‘s capital adequacy.

Britain‘s Financial Services Authority is concerned that the London-based insurer‘s capital could get tied up in different countries, limiting Prudential‘s ability to move money in the event of an emergency, a person with knowledge of the matter.

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