nsurance giant AIG has reported a big increase in fourth-quarter profit, due to a $17.7bn (£11.2bn) tax benefit.

Net profit for the quarter rose to $19.8bn from $11.2bn a year earlier.

An accounting determination that the firm is likely to post future profits allowed it to release a "deferred income tax valuation allowance".

In effect it means it will not pay tax on billions of dollars of future income thanks to benefits stemming from losses during the financial crisis.

AIG needed a government bailout in 2008 and is still majority-owned by the US government.

'High confidence'

AIG's aircraft leasing division returned to profit in the fourth quarter, while the value of its stake in Asian insurer AIA increased.

Its global insurance arm Chartis also swung to a profit despite catastrophe losses related to the Thailand floods last year.

Shares in AIG rose more than 6% in after-market trading in New York.

"Two years ago, sceptics - and even some supporters - thought it inconceivable that we would be in a position to post our second consecutive annual profit," said Robert Benmosche, AIG president and chief executive.

"In 2011, we began to prosper once again. We have a high degree of confidence in our future earnings prospects, which is a critical element in our assessment supporting the release of the deferred tax asset valuation allowance."

Source :bbc.co.uk