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Insurer AIG posts profit well above estimates

/ Source: The Associated Press

Insurance giant American International Group on Wednesday reported fourth quarter earnings well above Wall Street projections despite heavy storm losses and a settlement with federal regulators. Profits for the full year set a record, AIG said.

The New York-based company said net income for the October-December period totaled $3.02 billion, or $1.15 a share, up nearly 12 percent from profits of $2.7 billion, or $1.03 a share, a year earlier.

Analysts surveyed by Thomson First Call had expected earnings of $1.12.

The results included losses from hurricanes, typhoons, earthquakes and tsunamis of $170.5 million, or 7 cents a share. They also included an after-tax charge of $53 million, or 2 cents a share, for AIG’s previously announced settlement with the Securities and Exchange Commission, Department of Justice and other regulators for insurance contracts sold to PNC Financial Services Group Inc. and cell phone distributor Brightpoint Inc. that were used to manipulate earnings.

Excluding the special charges, net income for the fourth quarter was $3.29 billion, or $1.26 a share, compared with $2.75 billion, or $1.05 a share, a year earlier.

AIG Chairman Maurice Greenberg said in a statement accompanying the report that the company’s ability to absorb heavy catastrophe losses and regulatory penalties and still report record annual income “is a testament to the diversity and strength of our franchise.”

He said the company was continuing to cooperate with investigations stemming from the suit New York Attorney General Eliot Spitzer initiated last October against New York insurance broker Marsh & McLennan Companies Inc. for bid rigging, price fixing and using incentive fees to boost business. Marsh & McLennan recently announced a settlement in the case.

AIG was among insurance companies named in the suit but not charged.

Greenberg said that lawyers brought in to assist AIG in its internal review “have examined in excess of 850,000 e-mails and 30,000 documents.”

He added: “Based on all of the information we have today, we continue to believe that the issue that has been the primary focus of the New York attorney general’s investigation of AIG is confined to one broker relationship in one unit.”

For the year, AIG reported record net income of $11.05 billion, or $4.19 a share, compared with $9.27 billion, or $3.52 a share, in 2003. Excluding catastrophe losses and regulatory costs, net income was $12.19 billion, or $4.63 a share, compared with $10.26 billion, or $3.90 a share.