AIG swings to $3.96 billion loss on costs from plane-unit deal

February 21, 2013 10:24 AM

American International Group Inc., the insurer that repaid a U.S. bailout, posted its first loss in five quarters on costs tied to a deal to sell its plane-leasing unit.

The fourth-quarter net loss was $3.96 billion, or $2.68 a share, compared with profit of $21.5 billion, or $11.31, a year earlier, when AIG reported a tax benefit, the New York-based company said today in a statement. Operating profit, which excludes some investment results, was 20 cents a share, beating the average estimate for a loss of 8 cents in a Bloomberg survey of 17 analysts.

Chief Executive Officer Robert Benmosche, 68, has struck deals to sell units including non-U.S. life insurers to simplify the company and help repay the government. He reached a deal in December to sell at least 80% of the International Lease Finance Corp. plane business to a group of Chinese investors.

“They’re definitely making progress on making this something that’s a more simple company,” Paul Newsome, an analyst at Sandler O’Neill & Partners LP, said before results were announced. “It’s less messy than a year ago, but it’s still pretty messy.”

AIG surged about 365 in the past 12 months as the U.S. sold its stake in the company. The government owned as much as 92% of AIG during a bailout that began in 2008 and swelled to $182.3 billion. AIG sold more than $70 billion of assets such as Asian insurers and a U.S. consumer lender to help repay the rescue, which ended in December.

Tax Benefit

The insurer booked a tax benefit in the year-earlier period, after projecting it would generate enough operating profit to use the tax assets, which are tied to prior losses and can limit future payments to the government.

AIG’s fourth-quarter results include claims from superstorm Sandy, which struck the U.S. Northeast in October. The natural disaster cut profit at insurers including Travelers Cos., Chubb Corp., and Allstate Corp. Travelers, the lone insurer in the Dow Jones Industrial Average, reported $689 million of catastrophe costs in the fourth quarter, led by Sandy.

Benmosche sold AIG’s remaining stake in Hong Kong insurer AIA Group Ltd. in December, raising about $6.45 billion.

Bloomberg News

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