American International Group Inc. reported its first quarterly profit since 2007 on Friday, as the government-controlled insurer saw the value of some of its soured assets recover.
AIG said results at its core insurance operations fell during the second quarter due to the weak economy, a trend reported by other insurers. But investors appeared relieved by the companyâ€™s report. AIG shares jumped $4.11, or 18.2 percent, to $26.64 in midday trading Friday.
AIG said it earned $1.82 billion. Of that, $311 million, or $2.30 per share, was attributable to common shareholders because the government owns 80 percent of the company after bailing it out last fall.
A year earlier, AIG lost $5.4 billion, or $41.13 per share.Total revenue rose 48 percent, to $29.53 billion from $19.93 billion a year earlier.
Chairman and CEO Edward M. Liddy said in a prepared statement that company was still contending with the aftereffects of the companyâ€™s near-collapse last fall.
He said â€œperformance trends stabilized from the first quarter,â€ but added that AIGâ€™s financial results would continue to be volatile in future quarters, in part because of accounting charges related to its ongoing restructuring.AIGÂ now has received a government loan package worth up to $182.5 billion.
The company is in the process of trying to sell off some of its assets to begin to repay the government money. It said in a filing with the Securities and Exchange Commission on Friday that it expects proceeds of about $8 billion from sales so far this year, giving it about $4.6 billion to begin repaying debts, including what it owes the government.
The company said its profit was driven by the stabilizing value of some of its riskier investments, including in its AIG Financial Products Corp. portfolio, the division responsible for many of the transactions that prompted the government bailout last fall. AIGâ€™s near-collapse was due to risky contracts such as credit default swaps, which act as insurance to protect an investor against default on an investment such as a mortgage-backed security.