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AIG Q1 Earnings Beat on Premiums, Solid General Insurance Unit
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American International Group, Inc. (AIG - Free Report) reported first-quarter 2022 adjusted operating earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 4.8%.
AIG’s bottom line climbed 23.8% year over year, aided by solid underwriting results within the General Insurance segment. However, the upside was partly offset by reduced net investment income across its portfolio.
Total operating revenues of American International amounted to $11 billion, which improved 3.5% year over year in the first quarter on the back of higher premiums. However, the top line missed the consensus mark by 1.6%.
American International Group, Inc. Price, Consensus and EPS Surprise
Total net investment income of $3.2 billion declined 11% year over year in the quarter under review due to reduced call and tender income, fair value option equity and fixed maturity securities fetching lower returns coupled with a fall in income from hedge funds. Nevertheless, the downside was partly offset by improved returns stemming from other alternative investments.
AIG’s total benefits, losses and expenses increased 2.5% year over year to $10 billion primarily due to higher policyholder benefits and losses incurred, amortization of deferred policy acquisition costs, and general operating and other expenses.
Adjusted return on common equity came in at 7.6% during the first quarter, which improved 20 basis points (bps) year over year.
Segmental Performances
General Insurance
The segment’s net premiums written of $6.6 billion grew 2% year over year, driven by 6% and 5% growth in North America Commercial Lines and International Commercial Lines, respectively, resulting from continuous rate increases, solid retention rates and strong new business production.
Underwriting income of the segment amounted to $446 million in the quarter under review, which increased more than six-fold year over year. The same comprised of $274 million worth catastrophe losses (CATs), comparing favorably with CATs of $422 million in the prior-year quarter. The segment’s combined ratio improved 590 bps year over year to 92.9% in the first quarter.
Life and Retirement
Premiums of the segment came amounted to $840 million, which advanced 40% year over year in the quarter under review. Meanwhile, premiums and deposits of $7.3 billion rose 13% year over year on the back of higher fixed annuity sales. Segmental adjusted revenues for the first quarter dipped 0.4% year over year to $4 billion due to reduced policy fees and net investment income.
The segment’s adjusted pre-tax income plunged 23% year over year to $724 million, primarily due to a decline in yield enhancements within all segments coupled with the affordable housing portfolio sale.
AIG has been continuously pursuing efforts to separate its Life and Retirement unit ever since it announced its endeavor in 2020. After completing the sale of a 9.9% equity stake in the unit to Blackstone Inc. (BX - Free Report) for $2.2 billion last November, AIG finally stepped in to complement its desire to opt for an initial public offering (IPO) with regard to its unit separation. In March 2022, American International filed for an IPO for the Life and Retirement business in a bid to make it a standalone company. AIG intends to rebrand the holding company of its life and retirement arm, SAFG Retirement Services, Inc., as Corebridge Financial, Inc. Subsequent to the IPO, AIG intends to hold more than a 50% stake in Corebridge Financial.
Financial Position (as of Mar 31, 2022)
Cash balance of American International stood at $2.5 billion, down 9.3% year over year. Total assets of $573.5 billion decreased nearly 2% year over year.
Long-term debt amounted to $23.6 billion, which fell 10.8% year over year.
Total equity of $58.1 billion slipped 8.6% year over year. Debt to capitalization came in at 27.2% at the end of the first quarter, which improved 60 bps year over year.
Adjusted book value per share climbed 20% year over year to $70.72.
Share Repurchase & Dividend Update
In the first quarter, American International rewarded $1.7 billion to shareholders, which included $1.4 billion through share buybacks and dividends worth $265 million.
Concurrently, the board of directors approved an increase in the share buyback authorization to $6.5 billion. The increased authorization includes any leftover amounts under the previous authorization.
The board of directors approved a quarterly cash dividend of 32 cents per common share. The dividend will be paid on Jun 30, 2022, to shareholders of record as of Jun 16.
Of the multiline insurance industry players that have reported first-quarter results so far, the bottom line of The Hartford Financial Services Group, Inc. (HIG - Free Report) and Prudential Financial, Inc. (PRU - Free Report) beat the Zacks Consensus Estimate.
Hartford Financial reported first-quarter 2022 adjusted operating earnings of $1.66 per share, which beat the Zacks Consensus Estimate by 6.4%. The bottom line increased to nearly three-fold year over year. HIG’s operating revenues amounted to $3.6 billion, which improved 7.2% year over year in the first quarter. However, the top line missed the consensus mark by 1.6%. Total benefits and expenses of Hartford Financial decreased nearly 3% year over year to $4.9 billion in the quarter under review.
Prudential Financial’s first-quarter 2022 operating net income of $3.17 per share beat the Zacks Consensus Estimate by 18.7%. The bottom line decreased 22.9% year over year. PRU’s total revenues of $13.6 billion were down 3.9% year over year. The top line missed the Zacks Consensus Estimate by about 3.7%. Total benefits and expenses of Prudential Financial were $12.1 billion, up 3.2% year over year for the quarter.
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AIG Q1 Earnings Beat on Premiums, Solid General Insurance Unit
American International Group, Inc. (AIG - Free Report) reported first-quarter 2022 adjusted operating earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 4.8%.
AIG’s bottom line climbed 23.8% year over year, aided by solid underwriting results within the General Insurance segment. However, the upside was partly offset by reduced net investment income across its portfolio.
Total operating revenues of American International amounted to $11 billion, which improved 3.5% year over year in the first quarter on the back of higher premiums. However, the top line missed the consensus mark by 1.6%.
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote
Quarterly Operational Update
Total net investment income of $3.2 billion declined 11% year over year in the quarter under review due to reduced call and tender income, fair value option equity and fixed maturity securities fetching lower returns coupled with a fall in income from hedge funds. Nevertheless, the downside was partly offset by improved returns stemming from other alternative investments.
AIG’s total benefits, losses and expenses increased 2.5% year over year to $10 billion primarily due to higher policyholder benefits and losses incurred, amortization of deferred policy acquisition costs, and general operating and other expenses.
Adjusted return on common equity came in at 7.6% during the first quarter, which improved 20 basis points (bps) year over year.
Segmental Performances
General Insurance
The segment’s net premiums written of $6.6 billion grew 2% year over year, driven by 6% and 5% growth in North America Commercial Lines and International Commercial Lines, respectively, resulting from continuous rate increases, solid retention rates and strong new business production.
Underwriting income of the segment amounted to $446 million in the quarter under review, which increased more than six-fold year over year. The same comprised of $274 million worth catastrophe losses (CATs), comparing favorably with CATs of $422 million in the prior-year quarter. The segment’s combined ratio improved 590 bps year over year to 92.9% in the first quarter.
Life and Retirement
Premiums of the segment came amounted to $840 million, which advanced 40% year over year in the quarter under review. Meanwhile, premiums and deposits of $7.3 billion rose 13% year over year on the back of higher fixed annuity sales. Segmental adjusted revenues for the first quarter dipped 0.4% year over year to $4 billion due to reduced policy fees and net investment income.
The segment’s adjusted pre-tax income plunged 23% year over year to $724 million, primarily due to a decline in yield enhancements within all segments coupled with the affordable housing portfolio sale.
AIG has been continuously pursuing efforts to separate its Life and Retirement unit ever since it announced its endeavor in 2020. After completing the sale of a 9.9% equity stake in the unit to Blackstone Inc. (BX - Free Report) for $2.2 billion last November, AIG finally stepped in to complement its desire to opt for an initial public offering (IPO) with regard to its unit separation. In March 2022, American International filed for an IPO for the Life and Retirement business in a bid to make it a standalone company. AIG intends to rebrand the holding company of its life and retirement arm, SAFG Retirement Services, Inc., as Corebridge Financial, Inc. Subsequent to the IPO, AIG intends to hold more than a 50% stake in Corebridge Financial.
Financial Position (as of Mar 31, 2022)
Cash balance of American International stood at $2.5 billion, down 9.3% year over year. Total assets of $573.5 billion decreased nearly 2% year over year.
Long-term debt amounted to $23.6 billion, which fell 10.8% year over year.
Total equity of $58.1 billion slipped 8.6% year over year. Debt to capitalization came in at 27.2% at the end of the first quarter, which improved 60 bps year over year.
Adjusted book value per share climbed 20% year over year to $70.72.
Share Repurchase & Dividend Update
In the first quarter, American International rewarded $1.7 billion to shareholders, which included $1.4 billion through share buybacks and dividends worth $265 million.
Concurrently, the board of directors approved an increase in the share buyback authorization to $6.5 billion. The increased authorization includes any leftover amounts under the previous authorization.
The board of directors approved a quarterly cash dividend of 32 cents per common share. The dividend will be paid on Jun 30, 2022, to shareholders of record as of Jun 16.
Zacks Rank
American International currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Multiline Insurers
Of the multiline insurance industry players that have reported first-quarter results so far, the bottom line of The Hartford Financial Services Group, Inc. (HIG - Free Report) and Prudential Financial, Inc. (PRU - Free Report) beat the Zacks Consensus Estimate.
Hartford Financial reported first-quarter 2022 adjusted operating earnings of $1.66 per share, which beat the Zacks Consensus Estimate by 6.4%. The bottom line increased to nearly three-fold year over year. HIG’s operating revenues amounted to $3.6 billion, which improved 7.2% year over year in the first quarter. However, the top line missed the consensus mark by 1.6%. Total benefits and expenses of Hartford Financial decreased nearly 3% year over year to $4.9 billion in the quarter under review.
Prudential Financial’s first-quarter 2022 operating net income of $3.17 per share beat the Zacks Consensus Estimate by 18.7%. The bottom line decreased 22.9% year over year. PRU’s total revenues of $13.6 billion were down 3.9% year over year. The top line missed the Zacks Consensus Estimate by about 3.7%. Total benefits and expenses of Prudential Financial were $12.1 billion, up 3.2% year over year for the quarter.