While some of the middle-market players are feeling the heat, AIG is proving right those economists who say the giants of the insurance industry will recover first from the present capacity and exposures crises.

AIG Chairman Maurice Greenberg announced a 37% rise in net income to $1.8 billion for the second quarter of 2002, compared to $1.31 billion for the corresponding period last year. The results follow a first quarter rise of around 19.3%.

Mr Greenberg seemed moderately happy with the results, saying that with a solid quarter behind it, AIG’s core operations of insurance and financial services achieved “satisfactory results, partially offset by lower investment income”.

The company’s general insurance profits were up 34.2% to $6.78 billion, with a combined ratio of 94.09, compared to 95.52 last year.

And as for AIG’s foreign general insurance operations, Mr Greenberg said that they had shown strong growth with excellent underwriting results. Premiums were up 22.7% or $1.57 billion. The best performing regions were the UK and the Far East, while Europe, Southeast Asia and Latin America experienced strong premium growth.