USA- AIG fourth quarter earnings jump of 77% on tax benefit 

(MENAFN - Jordan Times) Insurer AIG (NYSE:AIG) late Thursday posted fourth-quarter earnings growth of 77 percent from a year ago on a large, one-time tax benefit.

The New York-based insurance giant, which was rescued from collapse in 2008 with an 85 billion bailout, reported net income of 19.8 billion compared with 11.2 billion in the fourth quarter of 2010.

After-tax operating income for the period that ended December 31, 2011, was 1.6 billion, or 82 cents per diluted share, compared to a loss of 2.2 billion, or 15.99 per diluted share, in the year-ago quarter.

Analysts had expected per share earnings of 63 cents.

AIG's CEO Robert H. Benmosche said: "Fourth quarter and full year profitability reflects the tremendous commitment and focus on business fundamentals by everyone at AIG.

"We have a high degree of confidence in our future earnings prospects, which is a critical element in our assessment supporting the release of the deferred tax asset valuation allowance."

The fourth quarter results were favourably impacted by a 17.7 billion tax benefit.

Losses at the insurer and its subsidiaries helped rack up more than 25 billion in deferred tax assets at the end of 2010 that can be used to lower obligations to the government. By booking the tax benefit, AIG is calculating it will be profitable enough to use the assets.

Chartis, AIG's property-casualty division, had operating income of 348 million, compared with a loss of 3.97 billion a year earlier. Sales at Chartis, which insures commercial property, corporate boards and planes, rose 3.6 percent to 7.85 billion.

AIG's US life insurance and retirement services unit posted operating income of 931 million, compared with a 1.04 billion profit a year earlier, as investment income slipped.

Overall, net investment income fell 16 percent to 4.59 billion on a slump in private equity and hedge fund holdings. Alternative investments generated an 86 million loss for AIG, compared with a 650 million profit a year earlier.

AIG had invested 18.8 billion in alternative funds at the end of 2011.

AIG's mortgage insurer, United Guaranty, reported an operating loss of 23 million in the fourth quarter, compared with operating income of 154 million a year earlier.

The CEO said AIG repaid the Federal Reserve Bank of New York in full in 2011 and restructured its debt with the federal government, creating a "clear exit path".

Full-year net income of 17.8 billion compares with a 7.8 billion profit in 2010, when the company posted gains on the sale of American Life Insurance Co., two-thirds of Asian insurer AIA, and other assets.

After-tax operating income for the full year of 2011 was 1.8 billion, or 1.02 per diluted share, compared with a loss of 898 million, or 6.57 per diluted share, in 2010.

Benmosche noted that AIG's 2011 full-year profit was the company's "second consecutive annual profit".