American International Group Inc., the world's largest insurer by market value, said on Thursday its quarterly profit rose 36 percent, driven by high insurance rates.
The New York-based company, which was added to the Dow Jones industrial average earlier this month, said its first-quarter net income was $2.66 billion, or $1.01 per share, compared with $1.95 billion, or 74 cents per share, a year earlier.
Excluding realized capital gains and losses and an accounting change, the company earned $1.08 per share, compared with 90 cents per share a year earlier. On that basis, Wall Street analysts on average expected earnings of $1.06 a share.
Revenue jumped 24.9 percent, to $23.64 billion.
In the first quarter, net premiums written rose 23.9 percent to $10.21 billion. The company continues to benefit from the rise in insurance rates that were pushed through by insurance companies over the last few years after a price war for much of the 1990s. But these increases have begun to level off and even decline in some lines.
"The substantial price increases over the past two years were very much needed, and in many classes of business, price increases are still necessary," Maurice "Hank" Greenberg, AIG's longtime chairman and chief executive, said in a statement.
Greenberg said some smaller insurers are selling insurance too cheaply in an effort to increase their market share. Because many companies that have had similar strategies in the past have become insolvent and failed to pay claims, he called it "junk insurance."
The company also logged strong growth in Japan and China. China is a relatively small contributor to AIG's earnings now, but the company has identified the world's most populous nation as a huge growth area. In October, it took a stake in PICC, China's largest property insurer.