U.S. insurance giant AIG has profit boosted by tax benefit

Linda Young – AHN News Writer

New York, NY, United States (AHN) – American International Group Inc. reported a profit of $19.8 billion for the fourth quarter of 2011, which was made possible by a large tax benefit the bailed-out insurer had after predicting it can keep generating profits in coming years.

AIG received more money from tax benefits than it did from operating income during Q4. It received $17.7 billion in tax benefits, compared to $1.6 billion in operating income from its insurance businesses and other units for the quarter.

The tax benefits came from the reversal of write-downs it took earlier.

The news boosted share value. Shares closed at $27.99 in trading on the New York Stock Exchange on Thursday afternoon just before AIG released its profit report. Then shares jumped above $29 in after-hours trading. That was the level at which the U.S. Treasury last sold part of its majority stake in AIG in May. Although the Treasury will wind down its ownership as market conditions allow, it still owns 77 percent of AIG.

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