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AIG (AIG) Beats on Q1 Earnings, Growth Initiatives On Track
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American International Group Inc. (AIG - Free Report) reported first-quarter 2017 operating income of $1.36 per share that surpassed the Zacks Consensus Estimate by a good 22.5%. Earnings were up from 65 cents in the year-ago quarter.
The company is getting along well with its expense reduction program as evident by an 18.6% decline in general operating and other expenses (GOE) to $2.4 billion.
Quarterly Segment Highlights
Commercial Insurance
Net premiums written were down 17% year over year to $3.6 billion due to strategic portfolio actions and increased premiums ceded under reinsurance transaction in the Property sub-segment.
Combined ratio of 102.2% deteriorated 450 basis points year over year, primarily due to an increase in loss ratio.
The segment’s pre-tax operating income of $849 million increased 28% year over year.
Consumer Insurance
Net operating revenues inched up 1% year over year to $5.9 billion backed by higher revenues from the Life Insurance and Group Retirement sub-segments partly offset by a decline in revenues from the Individual Retirement business.
Pre-tax operating income increased 49% year over year to $213 million, driven by higher returns on alternative investments and expense reductions across all Consumer Insurance businesses.
Financial Position
At the end of the first quarter, the insurer’s adjusted book value per share (excluding AOCI) was $74.58, up 1.6% from year-end 2016.
Core adjusted return on equity (ROE) was 10.2%, up from 6.8% in the year-ago quarter. The improvement in return came on the back of active capital management and expense efficiencies.
American International Group, Inc. Price, Consensus and EPS Surprise
In the first quarter, AIG spent $3.6 billion on share repurchase. Till May 3, 2017, AIG has repurchased an additional 18.1 million common shares for $1.1 billion.
On the day of the earnings release, the company increased its share buyback authorization. Now the company has $3.8 billion remaining under its share authorization plan.
Our Take
The company’s results reflected efforts to return to profitability. This is evident from the number of measures taken in this regard such as reduction of cost, divestment of non-core units and increase in share buyback. The company is also tracking on well with its capital management plans.
Given the restructuring initiatives being undertaken, we expect the company to post strong results in the coming quarters.
Among the other players in the same space, the bottom line at MetLife Inc. (MET - Free Report) , Prudential Financial Inc. (PRU - Free Report) and Aflac Inc. (AFL - Free Report) beat first-quarter estimates by 14.96%,5.68% and 3.09%, respectively.
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AIG (AIG) Beats on Q1 Earnings, Growth Initiatives On Track
American International Group Inc. (AIG - Free Report) reported first-quarter 2017 operating income of $1.36 per share that surpassed the Zacks Consensus Estimate by a good 22.5%. Earnings were up from 65 cents in the year-ago quarter.
The company is getting along well with its expense reduction program as evident by an 18.6% decline in general operating and other expenses (GOE) to $2.4 billion.
Quarterly Segment Highlights
Commercial Insurance
Net premiums written were down 17% year over year to $3.6 billion due to strategic portfolio actions and increased premiums ceded under reinsurance transaction in the Property sub-segment.
Combined ratio of 102.2% deteriorated 450 basis points year over year, primarily due to an increase in loss ratio.
The segment’s pre-tax operating income of $849 million increased 28% year over year.
Consumer Insurance
Net operating revenues inched up 1% year over year to $5.9 billion backed by higher revenues from the Life Insurance and Group Retirement sub-segments partly offset by a decline in revenues from the Individual Retirement business.
Pre-tax operating income increased 49% year over year to $213 million, driven by higher returns on alternative investments and expense reductions across all Consumer Insurance businesses.
Financial Position
At the end of the first quarter, the insurer’s adjusted book value per share (excluding AOCI) was $74.58, up 1.6% from year-end 2016.
Core adjusted return on equity (ROE) was 10.2%, up from 6.8% in the year-ago quarter. The improvement in return came on the back of active capital management and expense efficiencies.
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. Price, Consensus and EPS Surprise | American International Group, Inc. Quote
Capital Management Plan On Track
In the first quarter, AIG spent $3.6 billion on share repurchase. Till May 3, 2017, AIG has repurchased an additional 18.1 million common shares for $1.1 billion.
On the day of the earnings release, the company increased its share buyback authorization. Now the company has $3.8 billion remaining under its share authorization plan.
Our Take
The company’s results reflected efforts to return to profitability. This is evident from the number of measures taken in this regard such as reduction of cost, divestment of non-core units and increase in share buyback. The company is also tracking on well with its capital management plans.
Given the restructuring initiatives being undertaken, we expect the company to post strong results in the coming quarters.
Zacks Rank and Other Players
AIG carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other players in the same space, the bottom line at MetLife Inc. (MET - Free Report) , Prudential Financial Inc. (PRU - Free Report) and Aflac Inc. (AFL - Free Report) beat first-quarter estimates by 14.96%,5.68% and 3.09%, respectively.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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