American International Group (AIG) experienced a decline in profit during the second quarter of the year. Despite this, the company saw a significant increase in net investment income.
AIG reported a net income of $1.49 billion, equivalent to $2.03 per share, compared to $2.75 billion, or $3.43 per share, during the same period last year.
The decrease in profit was primarily attributed to lower net realized gains on specific funds, higher catastrophe losses, and increased interest crediting rates in the life and retirement business.
However, AIG’s “adjusted after-tax income,” which excludes nonrecurring items, reached $1.75 per share. This surpassed analysts’ expectations of $1.59 per share, as reported by FactSet.
According to Chief Executive Peter Zaffino, the $1.75 per share adjusted earnings figure represents the highest achieved by the company since 2007.
Net investment income for the quarter amounted to $3.6 billion, marking a significant increase of 37% compared to the previous year. This growth can be attributed to higher income from fixed maturity securities and loan portfolios, driven by higher reinvestment rates on new investments and floating rate securities.
Despite these financial developments, AIG’s shares experienced a 4% decline in after-hours trading, closing at $58.00.