AIG quarterly profit reverses a big loss
AIG, one of the largest global insurance companies, reported earnings of $1.8 billion in the second quarter, reversing a loss of $2.7 billion a year earlier.
American International Group’s equity stake in the insurance company AIA, which went public in Hong Kong in October, produced income of $1.5 billion. Its income from both property casualty and life insurance was slightly lower than it was last year. AIG’s earnings in the second quarter a year before were wiped out by a $3.3 billion goodwill impairment charge for discontinued operations.
AIG reported earnings per share of $1 per share. Operating income of 69 cents per share was below the 94 cents analysts expected.
In January, AIG laid the groundwork to start repaying US taxpayers the $182 billion in bailout money it got during the financial crisis. AIG paid back a portion of the government’s loans and renegotiated the rest of the package, which led to the government’s owning a 92 percent stake in AIG. The government plans to sell its shares over the next two years. On May 27, it sold 200 million shares, reducing its stake to 77 percent.
“Our continued improving operating results should provide a catalyst for the US Treasury to sell its shares at a profit for the taxpayers,’’ said chief executive Robert Benmosche.
AIG’s property and casualty business reported operating income of $789 million, compared to operating income of $955 million in the second quarter of 2010. The business had $539 million in catastrophe losses related to tornadoes in the Midwest, Southeast, and Northeast, and an earthquake in New Zealand.
The life insurance division, SunAmerica, reported income of $743 million, compared to $858 million in the year-earlier quarter. Its earnings fell due to reduced income from investments. Premiums and deposits were up 23.7 percent to $6.1 billion from last year.
CVS profit slips as contracts get lean
CVS Caremark Corp. said profit slipped 1 percent in the second quarter as its business of managing pharmacy benefits weathered lower prices on contract renewals.
Profit declined to $816 million from $821 million a year earlier. On a per-share basis, profit was unchanged at 60 cents. Excluding one-time items, the company earned 65 cents per share. Revenue rose 11 percent to $26.63 billion.
FactSet says analysts were forecasting a profit of 64 cents per share and $26.76 billion in revenue.
The Woonsocket, R.I., company says it faced lower prices related to contract renewals. The most significant of those was a large government contract the company renewed in the third quarter of 2010. Revenue from CVS drugstores, however, grew 3.6 percent to $14.83 billion.
GM’s earnings nearly double
General Motors Co., the largest US automaker, said that second-quarter profit almost doubled on rising domestic sales. Profit climbed to $2.52 billion, or $1.54 a share, from $1.33 billion, or 85 cents, a year earlier.
The $1.54-a-share figure topped the $1.20 average estimate of 13 analysts surveyed by Bloomberg. Sales rose 19 percent to $39.4 billion.
GM’s domestic sales climbed 11 percent to 669,065 light vehicles in the quarter, according to Autodata Corp., a researcher in Woodcliff Lake, N.J.
GM earned $2.2 billion before interest and taxes, up 3.8 percent from a year earlier. Analysts were watching GM’s North American profits because rising costs in the first quarter had undercut the automaker’s profitability in its home market.
The Treasury Department, which owns 33 percent of GM, plans to evaluate the earnings and the market’s reaction before deciding whether to sell more of its investment, a person familiar with the matter said last month.
The department wants to sell its stake for at least the IPO price of $33 a share and would prefer to sell in the high-$30 range.