By Hugh Son Nov. 6 (Bloomberg) -- American International Group Inc. posted its second straight profit as investment losses narrowed and catastrophe costs declined. Shares dropped in early trading as revenue fell at life and property-casualty operations. Third-quarter net income of $455 million, or 68 cents a share, compares with a net loss of $24.5 billion, or a reverse split-adjusted $181, a year earlier, New York-based AIG said today in a regulatory filing. “Even with the profit, AIG’s still a sick company,” said Robert Haines, an analyst at CreditSights Inc. in New York. “The trends of the underlying business units are ultimately more important to the company than a positive quarterly figure.” Chief Executive Officer Robert Benmosche, who started in August, is seeking to halt the departure of customers and employees so he can rebuild units he needs to sell to repay loans included in AIG’s $182.3 billion bailout. Benmosche stopped auctions for an investment adviser and a pair of Japanese units because he said they were more valuable with AIG. AIG, which was rescued last year after soured bets tied to mortgages pushed it to the brink of collapse, owes $44.5 billion on its Federal Reserve credit line, $3.2 billion more than three months earlier. The figure rose as the firm propped up its plane-leasing unit by extending $2 billion in credit and paid down a U.S. commercial paper facility. Shares Decline AIG fell $2.53, or 6.4 percent, to $36.75 at 7:09 a.m. in early New York trading. The shares gained 25 percent on the year through yesterday. Sales at property-casualty operations fell about 13 percent to $8.07 billion. Life insurance premiums and other considerations dropped 16 percent to $7.85 billion. Operating earnings, which exclude some investment results, were $2.85 a share, beating the average $2.39 estimate of three analysts surveyed by Bloomberg. Shareholders’ equity, a measure of assets minus liabilities, rose 25 percent to $72.7 billion from $58 billion on June 30. Under Benmosche’s predecessor Edward Liddy, AIG announced a plan to dismantle itself to repay its government loans. The firm has secured agreements to raise more than $12 billion by selling operations including a U.S. auto insurer, an equipment guarantor and a Taiwan life unit. No Call AIG is skipping, for the second straight quarter, the investor conference call that accompanied earnings in the past. Liddy opted against a call in August, at the end of his tenure, after holding question-and-answer sessions in prior quarters. Former CEOs Robert Willumstad, Martin Sullivan and Maurice “Hank” Greenberg held calls with analysts. The company is “in daily contact with our majority shareholder,” Christina Pretto, an AIG spokeswoman, said this week in an e-mail. The U.S. took a stake of almost 80 percent as part of the rescue. AIG posted net income of $1.82 billion in the second quarter, its first profit since 2007, on narrowing investment losses. Before that, AIG had reported more than $100 billion in net losses driven by declines on credit-default swaps and investments. The company has units that originate, insure and invest in home loans. The insurer was rescued in September 2008 with a package that was revised three times to include a $60 billion Federal Reserve credit line, a Treasury Department investment of as much as $69.8 billion, and up to $52.5 billion to buy mortgage-linked assets owned or backed by the company. AIG has placed its two biggest non-U.S. life insurance units, American International Assurance Co. and American Life Insurance Co., into special-purpose vehicles to pay down its debts to the Federal Reserve by $25 billion. The transactions, which AIG said would be completed by yearend, will cause a $5 billion pretax charge, the company said in August. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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