(Bloomberg) ? American International Group Inc., the world?s largest insurer, had a record $2.71 billion profit in the fourth quarter, compared with a year-ago loss, on growth in life insurance and annuities and expansion in Asia.

Net income was $1.03 a share, compared with a net loss of $103.8 million, or 3 cents, a year earlier, when the New York- based company had $1.8 billion in one-time costs, according to a company statement. Profit excluding investment gains and losses was $2.75 billion, or $1.05 a share, higher than the $1.04 estimate of analysts polled by Thomson Financial.

The first gain in global stocks in four years helped lift profit from annuities as growth in US property and casualty premiums slows. Chairman and Chief Executive Officer Maurice ?Hank? Greenberg, 78, boosted earnings from life insurance 59 percent, helped by the August acquisition of General Electric Co.?s Japanese life insurer.

?The life insurance business is certainly strong with continued strength in equity markets,? said Stephen Crane, an analyst who helps manage $187 billion at Banc One Investment Advisors. ?Everything looks like it?s going according to plan.? Banc One owned 6.8 million shares of American International as of December.

The stock rose 75 cents, or 1 percent, to $74.25 at 12:14 p.m. in New York Stock Exchange trading. They?re up 12 percent this year. Revenue rose 27 percent to $81.3 billion. The 59 percent jump in life insurance pretax profit to $1.8 billion came as realized investment losses shrank. Earnings from Japan and other countries outside the U.S. rose 27 percent to $1.08 billion and U.S. life insurance more than doubled to $717.2 million.

The company sold property and casualty policies worth $9.16 billion, 27 percent more than a year earlier. The pace of growth matched that in the third quarter. Premium revenue rose 25 percent to $8.4 billion.

American International earned $1.47 billion from property and casualty, before taxes, compared with a loss of $2.04 billion in the year-earlier period. The loss resulted from an addition to reserves for U.S. liability claims. Moody?s Investors Service has since had a negative outlook on AIG, indicating it?s more likely to cut the company?s AAA debt rating than raise it.

?Based on these results, we think Moody?s will be much closer to removing the negative outlook,? said Seth Glasser, an analyst at Barclays Capital who has an ?overweight? rating on AIG?s debt.

Fourth-quarter profit benefited from property and casualty premiums set as much as a year earlier. Insurers are slowing the pace of rate increases and in some cases lowering rates as business rebounds from the Sept. 11 terrorist attacks and declining stock investments. Profit from the company?s annuities and asset management arm rose 71 percent to $354.3 million, before taxes, as the S&P 500 advanced 11.6 percent in the quarter ? capping a 26 percent rise in 2003. American International is the fifth-biggest US seller of variable annuities.

The company?s purchase of General Electric?s Edison Life tapped Japanese customers who abandoned domestic life insurers after investment returns plunged. AIG jumped to the No. 6 life insurer in Japan from No. 10, by premiums.

Analysts such as UBS AG?s Andrew Kligerman project that profit from international life insurance may be growing faster than property and casualty earnings by 2005. AIG, which was founded in Shanghai in 1919, returned to China in the early 1990s after being rejected by the Communist government decades earlier.

AIG?s life insurance premiums from China may grow more than 40 percent a year for the next five years, helping Greenberg in his aim of making the life insurance business there bigger than any other division of the company, UBS? Kligerman estimates.

The purchase of a 9.9 percent stake of PICC Property & Casualty Co. and a related marketing agreement last year may also produce more than $1 billion in new sales in the next decade, said Brian Meredith, an analyst at Banc of America Securities. The agreement allows AIG to market accident policies through 4,000 PICC offices.

?That will have a material impact going forward,? Greenberg said on a conference call with analysts. ?Nobody in the world is going to have 4,000 branch offices in China except if you?re Chinese.?

Greenberg may be narrowing his choices for the next CEO of the $645 billion-asset company. Greenberg has declined to say when he will retire and his successor has been unclear since his son, Evan Greenberg, resigned in 2000. Greenberg promoted his head of Japan and Korea, 51-year-old Donald Kanak, to co-chief operating officer in December, joining Martin Sullivan, the 49-year-old former head of international property and casualty insurance, in the No. 2 spot.

Kanak replaced Edmund Tse, a 66-year-old senior vice chairman of life insurance who was thought by many analysts to be too old to be Greenberg?s pick.

?We think as more investors get to know Mr. Kanak, they will agree that AIG now has in place another CEO candidate who is at least as strong as Mr. Sullivan,? wrote Lehman Brothers analysts Eric Berg and Chris Winans. ?Both men, unlike Mr. Tse, are young enough to remain strong CEO candidates for at least five years.?