New-York based global insurer American International Group (AIG) has announced a profit increase of 25.7% to just over $US2.86 billion for the second quarter. It’s attributing most of the growth to the strong performance of it general insurance and foreign life insurance businesses.

Net income for the first six months of 2004 rose more than 30% to $US5.52 billion compared to $US4.23 billion for the same period in 2003.

The group’s general insurance division increased its written net premium for the quarter by 17.4% to $US10.38 billion. Operating income increased by almost 23% to $US1.59 billion.

AIG Chairman Maurice Greenberg says AIG’s results were on a par with other US and international insurers. “AIG had a very good quarter overall. With especially strong results from worldwide general insurance operations and foreign life & retirement services.”

He says the group produced the strong result by maintaining “a disciplined approach to pricing and risk selection”. He’s critical of smaller insurers slashing rates, and estimates AIG chose not renew about $US275 million in its domestic brokerage group and nearly $US50 million in premiums in its foreign operations.

“While the market generally has taken a rational approach to pricing, a few foreign and domestic companies have underpriced certain more difficult classes of long tail lines of business,” Mr Greenberg said. “These companies often lack the specialised knowledge, underwriting skills and claims management expertise that these lines require.”

He says companies looking to soften industry prices will “unsettle the market” and “add to long-term volitility”.

Mr Greenberg said he expects the group will extend its reach in Asia by the end of the year.