American International Group Inc. (AIG)reported earnings of $1.8 billion in the second quarter, reversing a loss of $2.7 billion a year ago. AIG's equity stake in insurance company AIA, which went public in Hong Kong in October, produced income of $1.5 billion.
Its income from both property casualty and life insurance were slightly lower than last year. AIG's earnings in the second quarter last year were wiped out by a $3.3 billion goodwill impairment charge for discontinued operations.
AIG reported earnings per share of $1 per share. Operating income of 69 cents per share was below the 94 cents that analysts were expecting.
In January, the insurance firm laid the groundwork to start repaying the American taxpayer the $182 billion in bailout money received during the financial crisis. AIG paid back a portion of the government's loans and renegotiated the rest of the package which led to the government owning a 92 percent stake in AIG.
The U.S. government is closely monitoring AIG's performance, because American taxpayers' investment is at stake. The government plans to sell its shares over the next two years. On May 27, the government sold 200 million shares, reducing its stake in AIG to 77 percent.
"Our continued improving operating results should provide a catalyst for the U.S. Treasury to sell its shares at a profit for the taxpayers," said AIG CEO Robert Benmosche.
AIG's property and casualty business reported operating income of $789 million, compared to operating income of $955 million in the second quarter of 2010. The business had $539 million in catastrophe losses related to tornadoes in the Midwest, Southeastern and Northeastern regions of the United States, and also an earthquake in New Zealand in June.
The life insurance division, SunAmerica, reported income of $743 million, compared to $858 million in the second quarter of 2010. Its earnings fell due to reduced income from investments. However, its premiums and deposits were up 23.7 percent to $6.1 billion from last year.