Consumer insurance, cost cuts boost AIG’s operating profit

(Reuters) – American International Group Inc , the largest U.S. commercial property and casualty insurer, reported a 10.4 percent rise in quarterly operating profit, helped by strength in its consumer insurance business and cost cuts.

Operating earnings attributable to AIG was $1.45 billion, or $1.53 per share, in the second quarter ended June 30, compared with $1.31 billion, or $1.15 per share, a year earlier.

Pre-tax operating profit in the company’s consumer insurance business rose 33 percent to $1.26 billion, helped by improved underwriting, cost cuts and stable earnings from retirement businesses.

The results come at a time when AIG’s new chief executive, Brian Duperreault, looks to bolster its businesses through acquisitions, while slowing the pace of share buybacks under its two-year turnaround plan.

Duperreault, a protégé of former CEO Hank Greenberg and an industry veteran known for his turnaround expertise, was named to the top job in May, replacing Peter Hancock.

“While market conditions remain challenging, we are committed to disciplined underwriting and are focused on investing in profitable growth,” Duperreault said.

Expenses fell 15.6 percent to $2.18 billion, helped by the sale of United Guaranty Corp and AIG Advisor Group.

Activist investor Carl Icahn, who is the insurer’s third-largest investor, had pushed for a major overhaul of the company, calling for its breakup to shed its designation as a non-bank systematically important financial institution.

Pre-tax operating income at AIG’s commercial insurance business fell about 24 percent to $716 million.

AIG’s share rose 1.7 percent to $65.90 in extended trading on Wednesday.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva)

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