American International Group Inc., the insurer that repaid a bailout last year, posted first-quarter profit that beat analysts’ estimates as results improved at the property-casualty operation.

Operating profit, which excludes some investment results, was $1.34 a share, beating the 88-cent average estimate of 19 analysts surveyed by Bloomberg. Operating income at the property-casualty unit, AIG’s largest, jumped 52 percent to $1.59 billion, as the business posted an underwriting profit, the New York-based insurer said today in a statement.

AIG agreed to sell more than $70 billion in assets such as a plane-leasing unit and Asian insurers since 2008 as Chief Executive Officer Robert Benmosche, 68, raised cash and simplified the firm. After repaying the U.S. in December, Benmosche is seeking to increase sales of consumer coverage to add to profits at the property-casualty unit.

“There were a lot of non-core aspects to the business that had to take up management time and energy,” Charles Sebaski, an analyst at BMO Capital Markets, said in an interview before results were announced. “You don’t turn a giant ship on a dime. It’s taken some time and I think we’re going to start to see that focus on core underwriting and core operations improvement.”

AIG advanced 3 percent to $43.38 in extended trading at 5:32 p.m. in New York. Book value, a measure of assets minus liabilities, rose to $67.41 per share at the end of March from $66.38 as of Dec. 31.

‘Investment Income’

Net income dropped 31 percent to $2.21 billion, after the CEO sold assets. Investment income dropped to $4.16 billion from $7.11 billion from a year earlier, when AIG booked gains on a Federal Reserve investment vehicle tied to the bailout and a stake in Hong Kong-based insurer AIA Group Ltd. that Benmosche’s company no longer owns.

At the property-casualty unit, led by Peter Hancock, AIG paid out 97.3 cents for claims and expenses for each premium dollar it took in, compared with paying $1.02 a year earlier. Premium revenue at the insurer of commercial property, corporate boards and airplanes fell about 1.5 percent to $8.56 billion.

Operating income at the life and retirement unit climbed 6.3 percent to $1.39 billion, as rising stocks help lift investment returns and fees. The Standard & Poor’s 500 Index advanced 10 percent in the first quarter. Premiums and deposits at the unit that’s run by Jay Wintrob were $5.58 billion, up from $5.56 billion in last year’s first quarter.

Private Equity

Returns from hedge funds at the life unit more than doubled to $262 million. Private equity investments contributed $166 million, up from $129 million.

AIG rallied 19 percent this year through the close of trading, beating the 18 percent advance of the Standard & Poor’s 500 Insurance Index. The shares have lost more than 90 percent of their value since the end of 2007. The U.S. took a stake that reached 92 percent as part of a bailout that began in 2008 and swelled to $182.3 billion.

The insurer became the largest in the world under former CEO Maurice “Hank” Greenberg, who left in 2005 and now runs Starr. AIG then narrowed its focus to global property-casualty coverage and U.S. life insurance as part of a plan made after the 2008 bailout.

A group of Chinese investors reached a deal in December to buy a majority stake in AIG’s International Lease Finance Corp. The group said it would buy at least 80.1 percent of plane- lessor ILFC for $4.23 billion in a deal that’s subject to approval by U.S. and Chinese regulators.

Planes, Mortgages

Pretax income from ILFC, excluding a loss on the sale, was $596 million in the quarter, surging from $118 million in the same period a year earlier, AIG said in a regulatory filing. The unit has about 1,000 owned and managed planes.

At the United Guaranty mortgage-insurance business, led by Donna DeMaio, operating profit was $41 million, improving from $8 million a year earlier. The business, which covers losses when homeowners default and foreclosures fail to recoup costs, is benefiting from an improving U.S. housing market.

Benmosche has said the company is weighing whether to shift some jobs to lower-cost locations, as AIG looks for ways to reduce expenses. The insurer warned some staff against buying New York-area homes, people familiar with the matter said.

“AIG’s results this quarter reflect the depth of our global operations, the market’s demand for the products and services we offer, and the strong performance of our investment portfolio,” Benmosche said in the statement. “Our priority this year is to improve operating fundamentals and reduce costs.”

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