American International Group Inc. boosted its common-stock
dividend by 124% and raised its share-repurchase target by $5
billion, signs of health that seemed unfathomable seven years ago
when it nearly collapsed into bankruptcy.
The moves came as the global insurer posted a 5.4% increase for
the second quarter in its closely watched operating profit, to
$1.89 billion, handily beating Wall Street analysts'
expectations.
While operating profit topped views, net income still fell 41%.
The company's bottom line was up against a tough comparison with
the year-earlier quarter, which had enjoyed a substantial gain tied
to the sale of an aircraft-leasing business. The most-recent
results included a loss in retiring some debt early, as the company
continued its effort to simplify its balance sheet.
But AIG's several-year restructuring effort to improve
profitability in its core business of selling property and casualty
insurance to businesses faced strong headwinds in the quarter.
Pricing pressures hurt some of the unit's business lines, and the
strong dollar in many countries worked against revenue growth. The
unit's results also were hurt as it bolstered some older claims
reserves.
The 5.4% increase in AIG's overall operating profit was largely
courtesy of gains in the value of AIG's remaining stake in the
aircraft-leasing business, which was among businesses sold to repay
U.S. taxpayers for its nearly $185 billion bailout, and an
investment in a Chinese insurer, PICC Group, as well as lower
corporate expenses and reduced interest payments on debt.
Write to Leslie Scism at leslie.scism@wsj.com
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