10-QPeriod: Q1 FY2010

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:AIG

Summary

American International Group, Inc. (AIG) reported a net income attributable to AIG of $1.451 billion for the first quarter of 2010, a significant improvement from a net loss of $4.353 billion in the same period of 2009. This turnaround was driven by improved market conditions, reduced impairments on securities, and strong performance in certain segments. The company continued its strategic focus on stabilizing businesses, completing asset dispositions, and repaying obligations related to the Federal Reserve Bank of New York (FRBNY) credit facility. Key drivers for the improved results included a substantial rebound in net investment income, particularly from AIG's interests in Maiden Lane II and III, which swung from significant losses in Q1 2009 to gains in Q1 2010. General Insurance also showed a strong recovery, with pre-tax income increasing significantly, albeit offset by increased catastrophe losses. The company is actively pursuing the sale of major subsidiaries, AIA and ALICO, which are expected to generate substantial proceeds to help repay its debt obligations. Despite progress, AIG's financial position remains complex, with ongoing restructuring efforts and significant reliance on government support structures.

Financial Highlights

26 data points
Beta

Revenue

$18.55B

Net Income

$1.78B

9.6% Net Margin

Total Assets

$863.70B

Cash & Equivalents

$2.13B

Free Cash Flow

$3.19B

Financial Statements
Beta
Revenue$18.55B
SG&A Expenses$1.61B
Interest Expense$1.75B
Net Income$1.78B
Shares Outstanding (Basic)135.66M
Shares Outstanding (Diluted)135.72M

Key Highlights

  • 1AIG reported a net income attributable to AIG of $1.451 billion, a significant turnaround from a net loss of $4.353 billion in the prior year's first quarter.
  • 2Net investment income saw a substantial increase to $4.836 billion from $915 million in Q1 2009, largely due to gains from Maiden Lane interests and improved partnership returns.
  • 3General Insurance operations delivered a strong pre-tax income of $1.016 billion, up from $102 million in the prior year, driven by improved underwriting profit and net investment income.
  • 4The company made significant progress in its asset disposition plan, entering into definitive agreements to sell AIA for approximately $35.5 billion and ALICO for approximately $15.5 billion.
  • 5Total revenues increased by 23% to $16.330 billion, primarily driven by a rebound in net investment income and improved results from discontinued operations.
  • 6AIG's liquidity remains a key focus, with outstanding borrowings under the FRBNY Credit Facility at $27.4 billion, though remaining available amounts under the facility and the Department of the Treasury Commitment provide significant liquidity.
  • 7The company continues to manage its AIG Financial Products (AIGFP) super senior credit default swap portfolio, which resulted in unrealized market valuation gains of $119 million in Q1 2010 compared to losses of $452 million in Q1 2009.

Frequently Asked Questions

For the three months ended March 31, 2010, AIG reported a net income attributable to AIG of $1.451 billion.

The significant increase in net investment income was primarily due to favorable changes in the fair value of AIG's interests in Maiden Lane II and Maiden Lane III, which contributed $911 million in the first quarter of 2010 compared to losses of $2.194 billion in the same period of 2009. Improved market conditions also boosted income from partnership investments.

AIG entered into definitive agreements to sell AIA for approximately $35.5 billion and ALICO for approximately $15.5 billion. The proceeds from these sales are intended to be used to repay outstanding debt under the FRBNY Credit Facility and redeem preferred interests held by the FRBNY.

The General Insurance segment showed a strong recovery, with pre-tax income increasing to $1.016 billion from $102 million in the prior year's first quarter. This improvement was driven by higher net investment income and improved underwriting profit, although catastrophe losses impacted the loss ratio.

AIG believes it has sufficient liquidity to meet its obligations for at least the next twelve months. It relies on dividends from subsidiaries, the FRBNY Credit Facility, and the Department of the Treasury Commitment. Proceeds from asset dispositions are earmarked for debt repayment. As of March 31, 2010, remaining available amounts under the FRBNY Credit Facility were $12.5 billion, and under the Department of the Treasury Commitment were $22.3 billion.