AIG LOOKING FOR ACQUISITIONS
Thursday October 26, 5:31 pm Eastern Time
AIG Sees Acquisition Opportunities
NEW YORK (Reuters) - American International Group Inc. (NYSE:AIG - news), the world's largest insurer by market value, posted a 15 percent rise in
third-quarter profits on Thursday, while its chairman raised the possibility of insurance acquisitions across the world.
The New York-based company, the No. 1 U.S. insurer of businesses and a global life insurer, said third-quarter operating profits, excluding realized
investment losses, rose to $1.41 billion, or 61 cents per share, boosted by greater sales in both life and general insurance policies. That compares with
$1.23 billion, or 53 cents a share, in the year-earlier quarter.
The results met the analysts' average profit forecast as polled by First Call/Thomson Financial, which compiles Wall Street estimates.
Third-quarter revenues rose 16 percent to $11.14 billion.
AIG shares fell $6-1/16, or 6.1 percent, to close at $93-5/8 on the New York Stock Exchange, however, as Chairman Maurice Greenberg said the company was in a good position to look at
acquisitions. An acquisition that uses AIG shares would likely dilute their value.
``The poor underwriting environment that existed for a number of years in the non-life sector in many parts of the world, as well as the failure to meet investment guarantees to policyholders in the life
sector, must lead to a continuing consolidation in the industry,'' Greenberg said in a statement commenting on the insurer's earnings.
``We view this as an opportunity, given our strong financial position and global network,'' said Greenberg. ``AIG is well positioned to evaluate such opportunities.''
On the subject of third-quarter earnings, Greenberg said AIG had a very good quarter, ``with increased momentum on the domestic commercial insurance pricing front, strong results from our overseas
general insurance business, an excellent quarter for life insurance, and outstanding results in our financial services and asset management businesses.''
The insurer was helped by ``increased momentum on the domestic commercial insurance pricing front,'' Greenberg noted, which is a crucial factor in its profits, affecting core U.S. company insurance
business.
He said the momentum should continue in future quarters, but warned that further price rises were needed.
``It bears repeating that while rates are clearly strengthening, rates had declined for nearly a decade, and hence the industry needs considerable improvement in pricing to get back to reasonable levels.''
Greenberg did not comment on the issue of his successor, an open question after Greenberg's 45-year-old son Evan, who was expected to be the next CEO, unexpectedly resigned from the company
last month.
The elder Greenberg, 75, has not announced plans to retire after more than 30 years leading AIG.
Third-quarter net profits, including realized investment losses, rose to $1.39 billion, or 60 cents per share, from $1.27 billion, or 54 cents a share.
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