US insurance giant American International Group Inc’s (AIG) profits fell 31 percent in the first quarter, but its core business continued to grow fast, with the results handily outpacing forecasts.
The fall in profits in the quarter to March 31 to US$2.21 billion (US$1.49 a share) was mainly due to the one-off benefits of asset sales accrued in the year-earlier quarter, including selling off Asian subsidiary AIA Group Ltd.
Those set aside, the company, still rebounding from near-collapse during the financial crisis, scored a 52 percent rise in operating income in its property casualty business, to US$1.59 billion, and a 6.2 percent gain in its life insurance and retirement business, to US$1.39 billion.
Net operating profits were US$1.98 billion, or US$1.34 a share, sharply higher than the US$0.87 share figure expected by analysts.
“AIG’s results this quarter reflect the depth of our global operations, the market’s demand for the products and services we offer and the strong performance of our investment portfolio,” AIG president and chief executive officer Robert Benmosche said.
“Our priority this year is to improve operating fundamentals and reduce costs,” he said in a statement.
Meanwhile, Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc, is planning an expansion in commercial insurance after hiring four executives from AIG.
“We would like to get into the commercial-insurance business very big time,” Buffett said on Thursday in an interview with Bloomberg Television’s Betty Liu, before the company’s annual meeting this weekend in Omaha, Nebraska. “We hired them because they’re very good at the commercial insurance business.”
Peter Eastwood, chief executive officer of AIG’s property-casualty operation in the Americas, was among executives joining Berkshire, along with other managers with commercial-insurance experience.
AIG named executives this week to fill several posts after the insurer’s shares dropped 3.3 percent on Friday last week, as the departures were reported.
Berkshire has units that provide auto coverage and reinsurance and has not played a big role in providing business policies, Buffett said, adding that he did not poach the executives from New York-based AIG.
“They came to us, they’ve called us,” Buffett said. “In fact some of them have called for a long time, so we did not initiate any of that.”