Shares of American International Group Inc. (AIG) rose 6 percent in after hours trade on Thursday, after the bailed out insurer reported a record rise in fourth-quarter profit, helped mainly by a huge tax gain and an appreciation in the value of its stake in Asian insurer AIA Group Ltd.
Results also reflect turnarounds in AIG's property insurance division Chartis and aircraft leasing unit International Lease Finance Corp.
AIG gained from a $17 billion U.S. deferred tax asset valuation allowance release during the quarter.
Results also included fair-value gain of about $1 billion related to a stake in AIA Group Ltd. AIG retained a stake in AIA after divesting two-thirds share in 2010 to raise funds to help pay back its rescue loan.
The quarter saw the company's Chartis division turn to a profit from a loss last year, when results were hurt by a reserve strengthening charge. Combined ratio at the segment improved to 107.3 from 160.5 last year. Premiums earned rose 4.8 percent from last year. Catastrophe losses were higher, mainly due to the devastating floods in Thailand.
International Lease Finance Corp., or ILFC, swung to a profit on lower impairment charges compared to last year, while rental revenue slid 8 percent.
At AIG's life insurance unit SunAmerica Financial Group, operating income slid from last year, due mainly to lower returns from hedge funds and private equity investments. Total revenue, including premiums and investment income, slipped 5 percent from last year.
Commenting on the results, AIG CEO Robert Benmosche said, "Fourth quarter and full year profitability reflects the tremendous commitment and focus on business fundamentals by everyone at AIG."
"The quality of our earnings, against the backdrop of record natural catastrophes, enables this great company to again stand proud as a market leader...," added Benmosche.
AIG reported fourth-quarter net income to common shares of $19.8 billion, compared to $2.3 billion last year.
On a per share basis, earnings were lower at $10.43, compared to $16.60 last year, due to increased share count.
Excluding items, operating earnings was $1.56 billion or $0.82 per share, compared to operating loss of $2.2 billion or $15.99 per share last year.
On average, 17 analysts polled by Thomson Reuters expected earnings of $0.61 per share for the quarter. Analysts' estimates typically exclude special items.
During the quarter, AIG repurchased about $70 million of AIG common stock at an average price of $22.75 per share.
AIG was bailed out by the federal government during the 2008 financial crisis with total assistance of $182 billion. Last year, AIG fully repaid the Federal Reserve Bank of New York Credit Facility and restructured the U.S. government ownership to provide the U.S. Treasury a clear exit path.
AIG closed Thursday at $27.99, up $0.32 or 1.16%, on a volume of 7.7 million shares on the NYSE. In after-hours, the stock further gained $1.77 or 6.32%.
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