NEW YORK CITY (dpa-AFX) - Insurance giant American International Group Inc. (AIG), said Thursday its third-quarter net loss significantly widened from last year, hurt mostly by equity-related losses stemming from volatile markets, increased catastrophe losses, and hefty impairment charges at its aircraft leasing unit.
New York-based AIG reported a third-quarter net loss to common shares of $4 billion, compared to a net loss of $2.5 billion last year. On a per share basis, net loss was $2.16, compared to $18.53 a year ago, reflecting a higher share count.
During the quarter, AIG incurred equity-related losses of $2.3 billion, an impairment charge of $1.5 billion pertaining to its aircraft leasing unit ILFC, and losses of $931 million related to its holding of Maiden Lane III Llc, a company created by the Fed. Reserve Bank of New York in its 2008 rescue of Bear Stearns.
Excluding items, operating loss was $3 billion or $1.60 per share, compared to operating loss of $114 million or $0.84 per share last year, hurt by equity-related losses and increased catastrophe expenses.
On average, 13 analysts polled by Thomson Reuters expected loss of $0.27 per share for the quarter. Analysts' estimates typically exclude special items.
Commenting on the results, AIG Chief Executive Robert Benmosche said AIG continues to face a tough economic environment and its results were hurt by 'equity market declines, widening credit spreads, and declining interest rates, as well as property catastrophe losses.'
Among the company's businesses, AIG's casualty and property division Chartis reported an operating income that declined to $442 million from $1.07 billion a year ago. Results include catastrophe losses of $574 million, mainly related to Hurricane Irene, which worsened its combined ratio to 106.4 from 99.3 last year. Meanwhile, net earned premium at Chartis grew 5.2 percent to $9.04 billion from last year.
At AIG's life insurance division SunAmerica Financial Group, operating income dropped to $444 million from $1.03 million last year, hurt mainly by equity-related losses. SunAmerica Financial's premiums, deposits, and other considerations totaled $5.7 billion, a 29 percent increase from last year, as group retirement products, individual fixed annuities, and individual variable annuities showed improvements.
At AIG's aircraft leasing unit International Lease Finance Corp., third-quarter operating loss was $1.3 billion, compared to a loss of $218 million last year, reflecting impairment charges for its older aircraft, while rental revenues remained almost flat at $1.1 billion.
AIG's Other operations, which now include results from the non-aircraft leasing operations, operating loss widened to $4.2 billion from a loss of $1 billion last year, hurt by fair value declines of its stake in Hong Kong-based AIA Group Ltd and Maiden Lane.
Separately, AIG said its Board has authorized a share repurchase program of its common stock of up to $1 billion, at par value of $2.50 per share.
Looking ahead, CEO Benmosche said economic conditions continues to be challenging, but added that AIG is encouraged by the progress in its core insurance business.
On November 1, AIG said it repaid $972 million to the U.S. Department of the Treasury, using primarily proceeds from the sale of its American Life Insurance Co. or ALICO subsidiary to MetLife Inc. (MET) in 2010 November.
AIG was bailed out by the federal government during the 2008 financial crisis for a total of $182 billion. The payment is the sixth major payback to the government in 2011 and brings the total amount repaid this year to about $45 billion, including a $2 billion payment in August, using proceeds from the sale of its Taiwan life insurance unit, Nan Shan Life Insurance Co. Ltd.
After the $972 million repayment, the Treasury's remaining investment in AIG is $50 billion.
AIG is also involved in a $10 billion lawsuit filed against Bank of America Corp. (BAC) on charges of selling defective residential mortgage-backed securities to the group. AIG is also said to be preparing similar suits against Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Deutsche Bank AG (DB).
AIG closed Thursday's regular trade at $24.63, up $0.44 or 1.82%, on a volume of 6 million shares on the NYSE. In after-hours, the stock lost $0.51 or 2.07%.
Copyright RTT News/dpa-AFX