AIG Posts $1.5bn Q1 Profit on Improved Mortgage Results

American International Group (AIG) reported $1.5bn of Q110 net income, compared with a $4.4bn net loss in the year-ago quarter. The return to profit comes as AIG’s mortgage guaranty insurer, United Guaranty Corporation (UGC), reported $73m of earnings on improved levels of delinquencies and defaults. “UGC reported a profit for the first time since the first quarter of 2007, as residential mortgage trends showed signs of improvement,” said AIG president and CEO Robert Benmosche, in the earnings statement. UGC reported $73m of operating income in Q110, compared with $483m of operating losses in the year-ago quarter. All lines of business except private student loans contributed to the improvement in operating income from the prior year. AIG said the domestic first-lien product line contributed the largest part of UGC’s improvement from the prior year as newly reported delinquencies and delinquent loan cures for the quarter improved. The improved quarterly results come as AIG remains under government support. “We remain focused on further stabilizing and strengthening our businesses while continuing our restructuring activities, closing the pending transactions, and developing plans to address our highly leveraged capital structure,” Benmosche said. AIG said it has $21.6bn outstanding net borrowings, as well as $5.8bn of accrued interest and fees, under a credit facility with the Federal Reserve Bank of New York at the end of the quarter. Net borrowing under the facility rose by $1.5bn from the end of the quarter to the end of April. Additionally, at the end of the quarter, AIG said $22.3bn remained under a commitment with the Treasury Department. Write to Diana Golobay. Disclosure: the author holds no relevant investments.

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