AMERICAN INTERNATIONAL Group, the insurer that almost failed in the 2008 crisis, could now withstand a severe downturn, its chief executive said after a market sell-off that presents a variety of challenges for the company.
In second-quarter results published after markets closed on Thursday, AIG reported net profits of $1.8 billion (€1.26 billion) compared with a net loss of $2.7 billion in the same period last year.
“Our crisis is over. It’s done,” said AIG chief executive Robert Benmosche.
Mr Benmosche said the company – which is 74 per cent owned by the US treasury – was transformed following the 2008 crisis and had a much better liquidity profile after shedding most of the notorious financial products division, which brought the company to the brink of collapse by bad bets insuring toxic securities.
“If the SP went to 923 [from 1,200] and at the same time we get a hurricane or natural disaster that far exceeds Katrina, we’ll be on the edge,” he said. “We’ll make it but we’ll be on the edge. We want to be sure not to make a boo-boo.”
Shares in AIG fell $1.79, or 6.4 per cent, to $26.40, below the price the treasury needs to realise at a planned offering later in the year if it is to make a profit on its rescue of the group.
The results, which fell short of analysts’ expectations, were published after the market closed and the shares dipped slightly more in after-hours trading. By lunch in the US yesterday, they were 4.25 per cent weaker on $25.38.
Mr Benmosche said he was comfortable with the treasury as a shareholder and did not “have a time frame” for the government to sell its stake. – (Copyright The Financial Times Limited 2011)
