By Leslie Scism
American International Group Inc., the big insurer that
received--and repaid--one of the biggest bailout packages of the
financial crisis, posted a sharply lower fourth-quarter profit,
weighed down by its big workers' compensation business and a charge
to retire some high-cost debt.
The global insurer reported quarterly net income of $655
million, a decline from $2 billion in the year-earlier period,
while its closely watched operating profit declined to $1.37
billion from $1.67 billion a year earlier. Operating income
excludes realized capital gains and losses in insurers' big
investment portfolios and some other items.
The quarterly operating profit tallied 97 cents a share, down
from $1.13 a share in the year-earlier period, and fell short of
$1.05 a share projected by analysts polled by Thomson Reuters.
Much of the miss came as AIG adjusted the reserves for workers'
compensation claims to reflect the steep drop in interest rates
last year. In addition, the company took a charge to reflect
additions to reserves for other lines of business. Those move
totaled $562 million, or 40 cents a share.
The results reflect the first full quarter at the helm of the
global insurer for Peter Hancock, who took over as chief executive
from Robert Benmosche on Sept. 1. Mr. Hancock will be on Friday
morning's conference call from California, where he is
participating in a White House summit on cybersecurity at Stanford
University. AIG is a major seller in the burgeoning area of
cyber-risk insurance.
Mr. Hancock has said he doesn't expect abrupt changes in
strategy and objectives. But he has made one notable change: The
company is now reporting its results under two overall operating
segments--commercial insurance and consumer insurance--while
scrapping its previous breakdown of results by type of insurance:
primarily, property-casualty and life.
Under the new arrangement, the company will group commercial
property-casualty insurance with mortgage guaranty insurance and
the institutional-business side of its previous life-insurance and
retirement-services unit. Its new consumer segment will include
retirement products, and life, auto, home and other types of
personal insurance.
Write to Leslie Scism at leslie.scism@wsj.com
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