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1 Thing to Focus On From AIG's Earnings

Matt Koppenheffer
November 5, 2012

If you're bullish on insurance giant AIG  (NYSE: AIG  ) , there's a good chance that your investment thesis goes something like this: AIG did some very stupid things in the past, but it's getting past those mistakes, and it's now a grossly undervalued company with quality insurance operations. 

That thesis, of course, hinges in a big way on that last part -- that AIG does, indeed, have insurance operations worth investing in.

For the third quarter, AIG's overall profit topped expectations, and results blew away what the company reported last year. But with so much messiness still showing up in AIG's results, it's hard to take away a whole lot that's meaningful from the overall bottom line.

Getting jiggy with P&C
Drilling down then to something that's more notable, AIG's property and casualty insurance operations managed to report a big bump, with profits climbing to $786 million from $492 million a year ago. The year-over-year gain was mostly attributable to investment performance as investment income, and capital gains were up a combined $300 million from 2011.

Underwriting, meanwhile, improved just slightly, with the quarter's underwriting loss improving from $532 million last year to $441 million this year. The combined rat