(Reuters) - Bailed-out insurer American International Group reported a $19.8 billion profit for the fourth quarter, after an accounting change that allowed the company to record an enormous one-time benefit.
The move, which sent the company's shares up by about 6 percent, essentially means AIG will not pay tax on tens of billions of dollars in income in the coming years, thanks to benefits that stem from its financial crisis-era losses.
AIG said in the third quarter that its results in the fourth quarter would determine whether it could release a so-called valuation allowance against the tax assets.
Having determined it is more likely than not to be consistently profitable in the future, it released most of the allowance, nearly $17.7 billion, in the quarter.
Some of the allowance, related to the company's life insurance business, was not released, a determination that future profits are not as immediately certain there. It may still be released in the future, though, which would again add to the company's bottom line.