American International Group Inc. fell the most in more than a year after second-quarter profit dropped at the company’s main insurance units.
AIG dropped 4.7 percent to $61.13 at 10:51 a.m. in New York, narrowing its gain this year to about 9 percent. Net income slipped to $1.8 billion, or $1.32 a share, from $3.07 billion, or $2.10 a year earlier, the New York-based insurer said in a statement Monday after the close of regular trading.
Claims costs rose, including for commercial-auto and life coverage, and sales were pressured amid increased competition. While Chief Executive Officer Peter Hancock has worked to free up cash for share buybacks and dividends, analysts are focused on declines at insurance units. Those operations are increasingly important to the company after the sale of businesses in industries such as lending and aircraft leasing.
“The operating results of the insurance businesses are deteriorating,” Paul Newsome, an analyst with Sandler O’Neill & Partners, said in a note Tuesday. “Its life insurance business is suffering from a serious reversal of favorable mortality results. Its property-casualty business continues to suffer from unfavorable reserve development.”
Pretax operating income at the commercial-insurance operation led by John Doyle declined 7.7 percent from a year earlier to $1.5 billion. At Kevin Hogan’s consumer business, profit slipped 8.6 percent to $1.02 billion.
AIG more than doubled its dividend Monday and increased its stock buyback authorization by $5 billion.