American International Beats Q3 Earnings Consensus

American International (AIG 39.28) reported third quarter earnings results of $2.85 per share. After, excluding non-recurring items, this was $0.87 better than the First Call consensus of $1.98.

The company reported that at September 30, 2009, total equity was $76.5 billion, a $14.4 billion increase from $62.1 bln at June 30, 2009. The increase includes $455 million of net income attributable to AIG, $12.1 billion of unrealized appreciation of investments, $2.1 billion from a draw-down of the Department of the Treasury Commitment related to the Series F Fixed Rate Non-Cumulative Preferred Stock, partially offset by a $350 million reduction in non-controlling interests.

The company said, "Our results reflect continued stabilization in performance and market trends. AIG employees are working to preserve the strength of our insurance businesses in a challenging market by working closely with our distribution partners, with third quarter 2009 showing signs of stabilization. Pricing in our commercial property casualty business has been stable. Management continues to monitor rates closely and maintain underwriting discipline, turning away some renewal business due to aggressive pricing by existing and new competitors. At AIGFP, virtually all key risk measures are down significantly and the earnings again benefited from a positive unrealized market valuation gain on the Super Senior Credit Default Swap portfolio.

The company also said, "Additionally, we announced the sales of Nan Shan and a portion of AIG's investment advisory and asset management business, as well as the combination of our Domestic Life Insurance & Retirement Services businesses and ongoing efforts to build their value as part of AIG... Improved market performance, together with application of the new investment impairment accounting standard adopted in the second quarter of 2009, drove a reduction in net realized capital losses compared to third quarter 2008 and positive valuation changes for our Maiden Lane Interests, as well as increases in partnership and mutual fund income. These gains were offset by impairments in the Asset Management segment, higher current accident year losses related to credit crisis exposures and prior accident year losses in General Insurance and lower income from Life Insurance & Retirement Services investment-linked and annuity products globally. When we close the special purpose vehicles with respect to AIA and ALICO with the Federal Reserve Bank of New York (FRBNY), we expect to recognize an approximate $5 bln charge for accelerated amortization of the prepaid commitment asset. These transactions are expected to close in the fourth quarter."