United Guaranty Corp., Greensboro, N.C. had pre-tax net income of $226 million for the second quarter, parent company American International Group said. The turnaround from a pre-tax loss of $488 million one year prior represents lower levels of newly reported delinquencies on domestic first and second lien loans and international products, as well as higher cure rates for those loans.
The unit also benefited from stop loss limits on certain second lien policies.
AIG president and chief executive Robert Benmosche said about UGC that it is "focused on differentiating itself through improved risk selection, effective loss mitigation and claims management."
Another AIG unit, American General Finance Inc., which makes mortgage loans, had an operating loss of $11 million for the quarter, an improvement over the operating loss of $202 million in the same period in 2009. The lower loss is due to a decline in the provision for loan losses.
AIG said it is exploring strategic alternatives for AGF, including a sale of all or most of it.
AIG Financial Products Corp., which is being wound-down, had a $132 million operating loss for the quarter, flat when compared with the second quarter 2009. AIGFP had unrealized market valuation gains of its super senior credit default swap portfolio of $161 million. AIGFP is the unit where AIG had its largest exposure to the residential mortgage-backed securities market.
Parent company AIG lost $2.7 billion in the quarter due to a $3.3 billion non-cash goodwill impairment charge related to discontinued operations.
