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Why Is American International Group (AIG) Down 3.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for American International Group (AIG - Free Report) . Shares have lost about 3.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American International Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

AIG Q2 Earnings and Revenues Beat

American International Group Inc. (AIG - Free Report) posted second-quarter 2019 operating income of $1.43 per share, beating the Zacks Consensus Estimate for earnings by 22% and up 36% year over year.

The recent results reflect gains in the company’s General Insurance and Life and Retirement segments.

Total revenues of $12.6 billion were up 8% year over year and surpassed the Zacks Consensus Estimate by 3.3%.

Total net investment income of $3.74 billion increased 22% year over year, due to favorable market performance and noteworthy income within the private equity portfolio.

Total benefit expenses of $11.3 was up 3.3% year over year, due to higher policy holder benefit and losses.

Adjusted return on equity was 11.6%, up 340 basis points year over year.
As of Jun 30, 2019, the insurer’s adjusted book value per share (excluding AOCI) was $56.89, down 0.7% year over year.

Strong Segment Results

General Insurance

Net premium written of $6.6 billion was down 6% year over year, due to a decline in premium international business, partly offset by higher premium written in the North America business.

The segment reported underwriting income of $147 million, compared with an underwriting loss of $89 million in the year-ago quarter. Combined ratio of 97.8% improved 350 basis points, due to decline in both expense ratio and loss ratio.

Life and Retirement

The segment reported adjusted income of $804 million, up 7.7% year over year, attributable to strong results at Life and Retirement and Life

Insurance sub-segments. Total revenues of $3.8 billion were up 10% year over year, primarily due to higher contribution from Institutional Markets, Life Insurance and Group Retirement market.

Financial Position

As of Jun 30, 2019, the company had long-term debt of $36.3 billion, up 7.4% year over year.

Total assets of $522 billion, as of Jun 30, 2019, were up 5.2% year over year.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, American International Group has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

American International Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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