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UPDATE 1-AIG's property unit reports underwriting loss

Thursday, 31 Oct 2013 | 4:51 PM ET

* Third-quarter operating earnings $0.96/share vs est. $0.94

* P&C combined ratio 101.6

* Shares down 3 pct in extended trading

Oct 31 (Reuters) - American International Group Inc reported an underwriting loss in its property and casualty business in the third quarter, sending its shares down 3 percent in extended trading.

The U.S. insurer, which was almost wiped out by its derivative bets in the housing crash five years ago, reported a better-than-expected operating profit.

Insurers have had trouble raising prices in their property and casualty businesses for some time, and losses from weather events and other natural disasters have also hurt the business.

Net premiums earned in the company's property casualty unit fell 4 percent to $8.43 billion in the quarter ended Sept. 30, while combined ratio improved 3.4 points to 101.6, indicating the business still not booking an underwriting profit.

A combined ratio below 100 indicates an underwriting profit, meaning an insurer is receiving more in premiums than it is paying out in claims.

AIG declared a 10 cent quarterly dividend. It restarted paying dividends earlier this year for the first time since receiving a $180 billion taxpayer bailout in 2008. It finished paying back those funds early this year.

The company's net income rose 17 percent to $2.17 billion, or $1.46 per share, from a year earlier.

On an operating basis, the company earned $1.4 billion, or 96 cents per share.

Analysts on average had expected earnings of 94 cents per share, according to Thomson Reuters I/B/E/S.

AIG shares were at $50.35 in trading after the bell after closing at $51.65 on the New York Stock Exchange on Thursday.