Troubled insurer AIG reports Q2 profit, first since 2007
NEW YORK -- The troubled insurer made $1.82 billion during the second quarter, ended June 30. Of that, $311 million, or $2.30 per share, was attributable to common shareholders because the government owns 80% of the company after bailing it out last fall.
For the year-ago second quarter, AIG lost $5.4 billion, or $41.13 per share.
The company has been aiming to spin off some of its assets to begin repaying the government money. It said in a filing with the Securities and Exchange Commission on Friday that it expects proceeds of about $8 billion from sales so far this year, giving it about $4.6 billion to begin repaying debts, including what it owes the government.
The company said its profit was driven by the stabilizing value of some of its riskier investments, including in its AIG Financial Products portfolio, the much-maligned division responsible for many of the transactions that prompted the government bailout last fall.
AIG's near-collapse last fall was because of risky contracts such as credit default swaps, which act as insurance to protect an investor against default on an investment such as a mortgage-backed security. The financial-products division was able to increase the value of remaining swaps on its books by $636 million during the quarter, thanks to improving credit markets. In the second quarter of 2008, AIG cut the value of those holdings by $5.57 billion.
Total revenue rose 48%, to $29.53 billion from $19.93 billion a year earlier. However, premiums fell during the quarter.
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