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Insurer AIG swings back to profit in first quarter

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Bailed out US insurance giant AIG posted on Friday a better than expected net profit of 1.45 billion dollars in the first quarter, a huge turnaround from a heavy loss a year earlier.

On a per share basis, excluding exceptional items, the first quarter profit for 2010 was 1.21 dollars, well above market expectations of 48 cents. The US insurer reported sales of 16.3 billion dollars for the first three months of the year.

American International Group, which was saved from bankruptcy by the US government in September 2008, had suffered a loss of 4.35 billion dollars in the first quarter of last year.

It returned to profit in the second and third quarters of 2009 before plunging back in the red in the last quarter, when it posted a loss of 8.87 billion dollars. AIG announced last month it was selling its Asian unit AIA to British insurer Prudential for 35.5 billion dollars and another unit, ALICO, to US rival MetLife for 15.5 billion dollars.

The deals should allow AIG to pay back a huge chunk of its government bailout. “These transactions are expected to close by the end of 2010 and allow the company to substantially reduce its obligations to the Federal Reserve Bank of New York (FRBNY) and take a significant step toward a sustainable capital structure,” AIG chief executive Robert Benmosche said in the earnings statement.

He added: “We remain focused on further stabilizing and strengthening our businesses while continuing our restructuring activities, closing the pending transactions, and developing plans to address our highly leveraged capital structure.”

Washington, May 7, 2010 (AFP)