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American International (AIG) Q3 Earnings Lag Estimates

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American International Group Inc. (AIG - Free Report) incurred third-quarter 2018 operating loss of 34 cents per share, missing the Zacks Consensus Estimate for earnings of 7 cents.  However, the figure narrowed from $1.22 per share of loss suffered in the year-ago quarter.

American International Group, Inc. Price, Consensus and EPS Surprise

This underperformance is due to soft results at Life and Retirement segment.

General Insurance Segment Rebounds

Pre-tax loss of $825 million narrowed from $2.9 billion loss in the prior-year quarter.

Underwriting loss of $1.7 billion narrowed from $3.8 billion loss incurred in the year-earlier period due to lower losses at both North America and International divisions.

Catastrophe loss in North America accounted for nearly half of the overall catastrophe loss in the quarter under review.

Net premium written of $6.8 billion was up 4% year over year.

Combined ratio of 124.4% improved 3270 basis points, primarily owing to decrease in the accident year loss ratio.

Reinsurance covers helped the segment incur lower-than-expected losses.

Life and Retirement Unit Results Weak

The segment reported a third-quarter adjusted pre-tax income of $713 million, down 38% year over year, attributable to soft results across all its divisions. Premium and fees of $943 million slumped 53% year over year, primarily driven by a plunge in premiums & fees from Institutional Markets.

Share Repurchase

In the third quarter, AIG bought back 6.6 million common shares worth $348 million and warrants for $2 million.

Financial Position

As of Sep 30, 2018, the insurer’s adjusted book value per share (excluding AOCI) was $55.58, down 3.2% from the level on Sep 30, 2017, attributable to catastrophe loss and an increase in the ADC deferred gain.

Core adjusted return on equity was (3.6%) compared with (11.6%) a year ago.

As of Sep 30, 2018, the company stood with liquidity and capital of around $4.5 billion. In the third quarter, the parent company received around $1.8 billion of distributions from insurance subsidiaries in the form of cash and fixed maturity securities.

Zacks Rank and Performance of Other Insurers

AIG carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other Multi Line insurers having reported third-quarter earnings so far, the bottom line of MGIC Investment Corporation (MTG - Free Report) , Radian Group Inc. (RDN - Free Report) and CNO Financial Group (CNO - Free Report) beat the respective third-quarter estimates.

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