American International Group, the US insurance company bailed out during the financial crisis, said it is cutting about 3 per cent of its global workforce even as it announced earnings that beat estimates.
The company said on Thursday it had taken a $265m severance charge at the end of 2013 to cover job cuts primarily in AIG’s property casualty unit, one of the company’s main divisions which covers homes, cars, and businesses. The cuts amount to about 1,500 people, a person familiar with the company said.
The insurance group has slowly recovered from its near-collapse in 2008, paying back almost $200bn in bailout funds to the US Treasury and Federal Reserve.
It has recorded a profit in seven of the last eight quarters as it divests non-core businesses and reduces expenses.
“Ultimately, we know that simplifying AIG will help you work more effectively, be more empowered to make decisions, and to be more informed,” chief executive Robert Benmosche wrote in a memo to staff, obtained by the Financial Times.
Profits at the insurer were $2bn in the final three months of last year, beating expectations, compared with a loss of $4bn in the same quarter a year ago, when it was hit by losses related to Sandy, the superstorm that hit the northeastern US.
Operating profit before tax at the company’s property casualty division rose to $1bn in the fourth quarter compared with a loss of $944m in the same quarter a year earlier. In the life and retirement part of the business, operating profit before tax increased to $1.4bn from $1bn.
Shares in the company rose 1 per cent in after-hours trading in New York.
The insurer, which faced near failure when financial bets tied to the subprime mortgage market backfired, is returning to its core businesses under Mr Benmosche.
Asset sales made as part of its strategy to return to health have left AIG roughly half the size that it was before the crisis. Late last year it agreed to sell its aeroplane leasing business to AerCap, a Dutch company, for $5.4bn.
AIG added on Thursday that it would buy back $1bn of shares and raised its quarterly dividend 25 per cent to 12.5 cents a share. The company completed its first share buyback since the bailout in the third quarter of last year.
“With another year of solid performance under our belts, I am confident that we have positioned ourselves for strong growth,” Mr Benmosche said.
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