American International Group, the insurance company that was bailed out by the government in 2008, reported a $19.8 billion profit in the fourth quarter of last year, nearly all of it due to a tax-related accounting gain.
In the same period a year earlier, the company earned $11.2 billion. Excluding the accounting adjustment, AIG had operating earnings of $1.6 billion, compared to an operating loss of $2.2 billion a year ago.
The company also earned $17.8 billion for 2011, its second straight year of profits. And that, CEO Robert Benmosche said in a statement, was something that AIG's skeptics would have thought "inconceivable" a couple of years ago. The insurance giant teetered near collapse in 2008 before being taken over by the federal government. The government still owns about 76 percent of AIG.
Despite the two years of profitability, AIG's recent financial results have been inconsistent. Over the past two years, only half of its quarterly reporting periods have been profitable.
Benmosche is trying to refocus AIG on property-casualty and life insurance while also pulling back on investments in riskier areas like the ones that got the company in trouble during the financial crisis. Benmosche also wants to free the company from government ownership.
The tax benefit came as the company released what are called deferred tax assets. Those are losses that companies carry on their books to reduce their future tax payments.
Interest expense fell, helped by AIG's paying down debt owed to the Federal Reserve Bank of New York.
AIG's aircraft leasing division swung to profitability again, and income from Asian insurer AIA and MetLife skyrocketed from year-ago levels.
Across the company, claims and claims adjustment expenses fell nearly 38 percent. The Chartis insurance unit swung to a profit despite catastrophe losses related to flooding in Thailand, helped by a rise in consumer insurance premiums. AIG credited "expense discipline" and "risk selection."
An exception was the Mortgage Guaranty insurance unit, which fell to a loss and underscored deeper concerns about how long the U.S. housing market will take to heal and how exposed companies like AIG are to it.
AIG's stock rose more than 3 percent in after-hours trading to $28.92. It's still well below the $40 levels it was at a year ago.