US insurance giant's profits tumble

The attacks did not push AIG into the red

AIG, the world's biggest insurer, posted an 81% plunge in profits, owing largely to the cost of claims from the terrorist attack on the World Trade Center.

"It's very impressive that even with the World Trade Center loss the company produced a profit," said James Ellman, a fund manager at Merrill Lynch.

AIG's core profits beat expectations among Wall Street analysts.

AIG, which has been at the forefront of lobbying the Bush Administration to aid the insurance industry, reported net losses of $820m from the 11 September attacks.

Confident outlook

"While it is impossible for any company to forecast these losses with precision, this is our best estimate," said AIG chairman Maurice Greenberg.

"Clearly, AIG's strong financial condition is not impacted by these losses," he added.

Mr Greenberg also sought to calm fears among investors and analysts that the cost could be higher if reinsurance firms, with whom insurers cover their risk, refuse to pay out.

AIG has "a high level of confidence" in its reinsurers, he said.

Acqusition on track

The fall in profits also reflected the cost of integrating AIG's $23bn acquisition of American General, for which the firm set aside $1.36bn in its third-quarter accounts.

For the three months from July to September, AIG posted a profit of $326m, or 12 cents a share.

This was down from an adjusted $1.7bn, or 65 cents a share in the same period of last year.

Core income 'on target'

But core income rose 14.1% to $1.9bn, or 72 cents per share, comfortably ahead of analysts' consensus estimates of 54 cents per share.

"AIG's core earnings were on target," Mr Greenberg proclaimed. "We achieved solid growth and profitability in our major businesses."

Revenues increased 12.9% to $15.7bn from $13.9bn year-earlier.