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Consumer division lifts AIG operating profit

AIG’s second-quarter operating profit grew 10% to $US1.45 billion ($1.82 billion) as an improved result from its consumer division offset commercial weakness.

President and CEO Brian Duperreault, who rejoined the company in May, says the result shows the value of a diverse business.

“We will build on AIG’s strong franchise by maximising the value of our international footprint, which distinguishes us from many of our competitors,” he said.

“While market conditions remain challenging, we are committed to disciplined underwriting and are focused on investing in profitable growth.”

Net income fell to $US1.13 billion ($1.42 billion) from $US1.91 billion ($2.4 billion) in the corresponding period last year, mainly due to net realised capital losses of $US69 million ($86.6 million), down from a $US1 billion ($1.3 billion) gain a year earlier.

Total consumer insurance operating profit grew 33% to $US1.26 billion ($1.58 billion), while the commercial insurance result dropped 24% to $US716 million ($899 million).

AIG says commercial net premium written fell 15% to $US3.83 billion ($4.81 billion) on “continued execution of strategic portfolio actions”. The division’s combined operating ratio deteriorated 4.4 percentage points to 102.7%.

The personal insurance combined operating ratio of 91.1% benefitted from favourable loss experience and lower catastrophe losses.

Mr Duperreault was appointed to replace Peter Hancock as CEO after AIG last year slumped to a loss.

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