AIG 4Q profit soars, but misses view

NEW YORK

American International Group Inc., the world's largest insurer, on Thursday reported fourth-quarter profit rose sharply from a year-ago period weighed down by hurricane losses, but results still missed Wall Street projections.

However, shares moved higher after-hours on news the company's board approved an $8 billion stock repurchase plan and expects to raise AIG's dividend by about 20 percent each year.

Profit for the quarter ended Dec. 30 rose to $3.44 billion, or $1.31 per share, from last year's $444 million, or 17 cents per share, which included billions in charges for regulatory settlements and catastrophe-related losses.

In the 2006 quarter, a legal settlement and the insurer's exit of its domestic financial institutions' credit life business decreased profit by $124 million, or 5 cents per share. In addition, a charge related to an increase in its asbestos and environmental reserves cut $129 million, or 5 cents per share, from its bottom line.

Adjusting for one-time items, profit totaled $3.85 billion, or $1.47 per share, in the latest period.

Results missed Wall Street projections for earnings of $1.49 per share, according to analysts polled by Thomson Financial.

AIG also reported its financial services operating income slid to $126 million from $793 million in the year-ago period. Triggering the fall was a $764 million decline in its derivatives portfolio.

For the year, the financial services business reported profit fell 88 percent to $524 million, from $4.28 billion a year-earlier. The derivatives portfolio's value dropped $1.82 billion during the year.

Separately, the company said its board approved a new buyback plan that will allow AIG to repurchase up to $8 billion in stock, with $5 billion of the buyback slated for this year. Furthermore, the company said it will lift its common stock dividend by about 20 percent a year under "normal" circumstances.

AIG shares rose 30 cents to close at $67.41 on the New York Stock Exchange, and climbed $1.54, or 2.3 percent, to $68.95 in after-hours trading. The stock rose almost 7 percent during the fourth quarter, and closed 2006 at $71.66.