NEW YORK (Bloomberg) ? American International Group Inc., the world?s largest insurer, said fourth-quarter profit rose almost eightfold a year after the company paid $1.64 billion to settle probes of accounting and sales practices.

Net income increased to $3.44 billion, or $1.31 a share, from $444 million, or 17 cents, a year earlier, the New York-based company said yesterday in a statement. Excluding changes in the value of investments and derivative instruments, profit was $1.47 a share, lower than the $1.50 average estimate of 18 analysts compiled by Bloomberg.

AIG?s overseas life insurance and retirement savings division increased pre-tax profit 33 percent, the most in at least two years. The results, combined with a rebound in property and casualty earnings, helped chief executive officer Martin Sullivan distance AIG from the 2005 probes, which ended the 38-year reign of his predecessor, Maurice (Hank) Greenberg.

?Their foreign life results were very strong; it shows the franchise is still intact,? said Rob Haines, an insurance analyst at New York-based CreditSights Inc. ?Every quarter where there isn?t a taint of anything is a positive.?

The company also said it will buy back up to $8 billion in shares, with $5 billion coming during 2007. That amounts to about 118.7 million shares based on yesterday?s closing price of $67.41, or 4.6 percent of the outstanding stock. AIG also said it will begin increasing its dividend, now at 16.5 cents a share, by 20 percent a year beginning in May.

Claims from property and casualty policies fell 25 percent, contributing to a pre-tax operating profit of $2.51 billion, as AIG suffered ?no significant? catastrophe claims during the year. A year earlier the company posted a $1.16 billion pre-tax operating loss after it increased reserves for asbestos claims and paid for damage from Hurricanes Katrina and Wilma.

Claims from hurricanes and an increase in reserves for asbestos lawsuits cost $1.73 billion in the fourth quarter of 2005.

For every $1 in property and casualty premiums collected, the company used 91.69 cents to pay claims and expenses, worse than the 89.1 cents estimated by Paul Newsome, an analyst at St. Louis-based A.G. Edwards & Sons Inc.

AIG gets about a third of its profit from selling life insurance and retirement savings products in Asia and other regions outside the US. Earnings from those businesses increased 33 percent, or 9.7 percent excluding certain tax matters, the company said.

Results from foreign life insurance and retirement services ?have been improving,? Sullivan said in the statement. ?Our strategy to shift the product mix to investment-linked and personal accident and health products was well executed.?

AIG, the country?s largest insurer of businesses, wants a bigger share of the $164 billion auto insurance market as fewer accidents widen profit margins. In January the company offered $690 million to take full control of 21st Century Insurance Group, a California car insurer it holds a 62 percent stake in.

?People were wondering when they were going to take car insurance like they have other markets,? said Richard Sbaschnig, an analyst at Oppenheimer & Co. in New York. ?Now they?ll take the gloves off.?

Shares of AIG were at $68.11 in trading after the close on the New York Stock Exchange, where they finished at $67.41. The shares have climbed 1.8 percent in the past 12 months, underperforming the 8.4 percent increase of the 24-member KBW Insurance Index. Results were released after the close of regular trading.

The company said profit was reduced by 10 cents a share because it boosted reserves for environmental claims, lost an arbitration ruling and had costs tied to its exit from a US credit business.

AIG?s settlement resolved probes by former New York Attorney General Eliot Spitzer, the US Securities and Exchange Commission and the Justice Department. The company restated earnings twice, lowering net income for 2000 to 2005 by $3.4 billion, after officials alleged it misled investors, cheated workers compensation programs and fabricated insurance quotes.

Spitzer, now the governor of New York, also sued Greenberg. He has denied the allegations, saying much of AIG?s corrections were unnecessary and prompted by fear of regulators.