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American International (AIG) Q4 Earnings Miss, Revenues Beat
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American International Group Inc.'s (AIG - Free Report) fourth-quarter 2020 adjusted operating earnings of 94 cents per share missed the Zacks Consensus Estimate by 4.1%.
The bottom line also declined 8.7% year over year due to higher catastrophe (CAT) loss including COVID-19 CATs as well as an unfavorable prior-year loss reserve development, partially offset by improved alternative investment returns. The decrease also reflects the sale of Fortitude in the second quarter of 2020.
Total revenues of nearly $12 billion dipped 0.8% year over year due to reduced premiums, dip in policy fees and lower investment income. The top line, however, beat the Zacks Consensus Estimate by 8.53%.
Total net investment income of $3.2 billion decreased 7% year over year.
Total benefit, losses and expenses of $10.23 billion declined 5.1% year over year owing to lower policyholder benefits and losses incurred, interest credited to policyholder account balances and amortization of deferred policy acquisition costs.
Adjusted return on capital employed was 4.4%, down 230 basis points year over year.
As of Dec 31, 2020, the insurer’s adjusted book value per share was $57.01, up 0.4% from Sep 30, 2020.
American International Group, Inc. Price, Consensus and EPS Surprise
Net premium written slipped 5% year over year to $5.6 billion due to lower contribution from North American Personal lines business.
The segment reported an underwriting loss of $171 million against the underwriting gain of $12 million in the year-ago quarter. The underwriting loss included $545 million of CATs, reflecting $367 million of non-COVID-19 CATs, primarily related to hurricanes Sally, Zeta, Laura and Delta and $178 million of COVID-19 CATs, primarily related to Travel, Contingency and Validus Reinsurance, Ltd.
The General Insurance combined ratio was 102.8, reflecting a 3- point increase year over year.
Life and Retirement
Life and Retirement reported an adjusted pre-tax income of $1.03 billion, up 20% year over year on increased contribution from Individual and Group Retirement, and Institutional Markets.
Premiums were $950 million, reflecting a decrease of 4% year over year. Premiums and deposits increased 4% year over year on Institutional Markets activity, partially offset by lower Fixed and Index Annuities, and Group Retirement deposits.
On Oct 26, 2020, AIG announced its intention to separate its Life and Retirement business. Decisions are yet to be taken on the structure of the initial disposition of up to a 19.9% interest in the Life and Retirement business.
Capital Position (Dec 31, 2020)
AIG exited the fourth quarter with cash of $2.8 billion, down 1% from 2019 end.
The company’s long-term debt of $28.1 billion decreased 2.2% sequentially.
Total equity of $67.2 billion slid 0.3% year over year.
Total assets of $586.5 billion increased 11.7% from the level at 2019 end.
Of the multi-line insurance industry players, which have reported third-quarter results so far, earnings of Old Republic International Corporation (ORI - Free Report) , Chubb Ltd. (CB - Free Report) and MetLife, Inc. (MET - Free Report) beat the respective Zacks Consensus Estimate by 87.5%, 10.8% and 32.68%, respectively.
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American International (AIG) Q4 Earnings Miss, Revenues Beat
American International Group Inc.'s (AIG - Free Report) fourth-quarter 2020 adjusted operating earnings of 94 cents per share missed the Zacks Consensus Estimate by 4.1%.
The bottom line also declined 8.7% year over year due to higher catastrophe (CAT) loss including COVID-19 CATs as well as an unfavorable prior-year loss reserve development, partially offset by improved alternative investment returns. The decrease also reflects the sale of Fortitude in the second quarter of 2020.
Total revenues of nearly $12 billion dipped 0.8% year over year due to reduced premiums, dip in policy fees and lower investment income. The top line, however, beat the Zacks Consensus Estimate by 8.53%.
Total net investment income of $3.2 billion decreased 7% year over year.
Total benefit, losses and expenses of $10.23 billion declined 5.1% year over year owing to lower policyholder benefits and losses incurred, interest credited to policyholder account balances and amortization of deferred policy acquisition costs.
Adjusted return on capital employed was 4.4%, down 230 basis points year over year.
As of Dec 31, 2020, the insurer’s adjusted book value per share was $57.01, up 0.4% from Sep 30, 2020.
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote
Segmental Update
Weak Performance at General Insurance
Net premium written slipped 5% year over year to $5.6 billion due to lower contribution from North American Personal lines business.
The segment reported an underwriting loss of $171 million against the underwriting gain of $12 million in the year-ago quarter. The underwriting loss included $545 million of CATs, reflecting $367 million of non-COVID-19 CATs, primarily related to hurricanes Sally, Zeta, Laura and Delta and $178 million of COVID-19 CATs, primarily related to Travel, Contingency and Validus Reinsurance, Ltd.
The General Insurance combined ratio was 102.8, reflecting a 3- point increase year over year.
Life and Retirement
Life and Retirement reported an adjusted pre-tax income of $1.03 billion, up 20% year over year on increased contribution from Individual and Group Retirement, and Institutional Markets.
Premiums were $950 million, reflecting a decrease of 4% year over year. Premiums and deposits increased 4% year over year on Institutional Markets activity, partially offset by lower Fixed and Index Annuities, and Group Retirement deposits.
On Oct 26, 2020, AIG announced its intention to separate its Life and Retirement business. Decisions are yet to be taken on the structure of the initial disposition of up to a 19.9% interest in the Life and Retirement business.
Capital Position (Dec 31, 2020)
AIG exited the fourth quarter with cash of $2.8 billion, down 1% from 2019 end.
The company’s long-term debt of $28.1 billion decreased 2.2% sequentially.
Total equity of $67.2 billion slid 0.3% year over year.
Total assets of $586.5 billion increased 11.7% from the level at 2019 end.
American International carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multi Line Insurers
Of the multi-line insurance industry players, which have reported third-quarter results so far, earnings of Old Republic International Corporation (ORI - Free Report) , Chubb Ltd. (CB - Free Report) and MetLife, Inc. (MET - Free Report) beat the respective Zacks Consensus Estimate by 87.5%, 10.8% and 32.68%, respectively.
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Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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