American International Group Inc (AIG.N) announced its first capital return since its 2008 bailout, through a dividend and share buyback, sending its shares up 6 percent after the bell.
The insurer, which was almost wiped out by its derivative bets in the crash five years ago, reported a quarterly profit that handily beat Wall Street estimates, along with a quarterly dividend of 10 cents and a share buyback of up to $1 billion.
The insurer has not paid dividends since receiving the first portion of a U.S. taxpayer-funded bailout in 2008 that eventually topped $180 billion. AIG finished paying back those funds early this year.
"AIG is a fundamentally different, simpler company than it was three years ago," Chief Executive Robert Benmosche said in a statement.
Net income rose to $2.73 billion, or $1.84 per share, in the second quarter, from $2.33 billion, or $1.33 per share, a year earlier.
On an operating basis, AIG earned $1.12 per share.
Analysts on average expected the company to earn 86 cents per share, according to Thomson Reuters I/B/E/S.
AIG's property casualty unit reported operating income of $1.09 billion in the second quarter, up from $936 million a year earlier.
AIG said the capital returns were approved without assuming the pending sale of its airplane leasing unit International Lease Finance Corp (ILFC).
"A lot of people thought that ILFC had to be sold first.. the capital plan was approved without the sale and that gives a lot of credence to the capital position," BMO Capital Markets analyst Charles Sebaski told Reuters.
AIG shares, which closed at $47.07, were trading at $49.69 in trading after the bell.