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American International (AIG) Q2 Earnings Top on Premium Growth
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American International Group, Inc. (AIG - Free Report) reported second-quarter 2023 adjusted operating earnings per share (EPS) of $1.75, which comfortably beat the Zacks Consensus Estimate 13.6%. Also, the bottom line jumped 47% year over year in the second quarter.
Operating revenues of $13.1 billion increased from $10.9 billion a year ago, beating the consensus estimate by 7%.
The strong second-quarter results were supported by improving net premiums earned and growing net investment income, partially offset by reduced alternative investment income and higher expenses. Solid North America Commercial Lines growth aided AIG’s second-quarter results.
American International Group, Inc. Price, Consensus and EPS Surprise
Total net investment income increased 37% year over year to $3,571 million due to increased yields generated from fixed-maturity securities and loan portfolios. The figure beat our estimate by 35.9%.
American International’s total benefits, losses and expenses of $11,351 million increased 16.6% year over year, primarily due to higher policyholder benefits and losses incurred. The figure was higher than our estimate of $11,220.5 million.
Adjusted return on common equity increased 170 basis points (bps) year over year to 9.4% in the second quarter.
Segmental Performances
General Insurance
The segment reported net premiums written of $7,537 million, which increased 10% year over year and grew 11% on a constant-dollar basis. The metric beat our estimate by 3.4%. Positive rate movement, business generation and higher retention levels supported AIG’s North America Commercial Lines business. Rising renewal premium rates aided the Commercial Lines operations.
Underwriting income of $594 million plunged 26% year over year in the second quarter. The same comprised catastrophe losses of $250 million, primarily due to U.S. convective storms and Typhoon Mawar.
The segment’s combined ratio deteriorated 350 bps year over year to 90.9% in the quarter under review.
Life and Retirement
Premiums and fees of the segment increased 75% to $3,238 million in the second quarter. This metric beat our estimate by 37.2%. Meanwhile, premiums and deposits of $10,054 million jumped 42% from a year ago. Adjusted revenues of the segment amounted to $5,916 million, up from $4,039 million in the prior-year quarter due to higher net investment income and premiums. The figure beat our estimate by 29.6%. The segment’s adjusted pre-tax income of $991 million increased 33% in the second quarter.
Financial Position (as of Jun 30, 2023)
American International exited the second quarter with a cash balance of $2,283 million, which increased from $2,043 million at 2022-end. Total assets of $537.1 billion increased from $522.2 billion at 2022-end.
Short and long-term debt of $21.4 billion rose from $21.3 billion at the prior-year end.
Total equity rose to $46.5 billion from $43.5 billion at the prior-year end. Total debt and preferred stock to total capital was 32.3% at the second-quarter end.
Adjusted book value per share was $75.76, up from $73.78 a year ago.
Share Repurchase & Dividend Update
American International rewarded its shareholders with $554 million in repurchases and dividends worth $268 million. The company increased its quarterly dividend by 12.5% to 36 cents per share.
AIG’s board of directors increased share repurchase authorization to $7.5 billion on Aug 1.
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate. Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 EPS of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.
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American International (AIG) Q2 Earnings Top on Premium Growth
American International Group, Inc. (AIG - Free Report) reported second-quarter 2023 adjusted operating earnings per share (EPS) of $1.75, which comfortably beat the Zacks Consensus Estimate 13.6%. Also, the bottom line jumped 47% year over year in the second quarter.
Operating revenues of $13.1 billion increased from $10.9 billion a year ago, beating the consensus estimate by 7%.
The strong second-quarter results were supported by improving net premiums earned and growing net investment income, partially offset by reduced alternative investment income and higher expenses. Solid North America Commercial Lines growth aided AIG’s second-quarter results.
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 increased 37% year over year to $3,571 million due to increased yields generated from fixed-maturity securities and loan portfolios. The figure beat our estimate by 35.9%.
American International’s total benefits, losses and expenses of $11,351 million increased 16.6% year over year, primarily due to higher policyholder benefits and losses incurred. The figure was higher than our estimate of $11,220.5 million.
Adjusted return on common equity increased 170 basis points (bps) year over year to 9.4% in the second quarter.
Segmental Performances
General Insurance
The segment reported net premiums written of $7,537 million, which increased 10% year over year and grew 11% on a constant-dollar basis. The metric beat our estimate by 3.4%. Positive rate movement, business generation and higher retention levels supported AIG’s North America Commercial Lines business. Rising renewal premium rates aided the Commercial Lines operations.
Underwriting income of $594 million plunged 26% year over year in the second quarter. The same comprised catastrophe losses of $250 million, primarily due to U.S. convective storms and Typhoon Mawar.
The segment’s combined ratio deteriorated 350 bps year over year to 90.9% in the quarter under review.
Life and Retirement
Premiums and fees of the segment increased 75% to $3,238 million in the second quarter. This metric beat our estimate by 37.2%. Meanwhile, premiums and deposits of $10,054 million jumped 42% from a year ago. Adjusted revenues of the segment amounted to $5,916 million, up from $4,039 million in the prior-year quarter due to higher net investment income and premiums. The figure beat our estimate by 29.6%. The segment’s adjusted pre-tax income of $991 million increased 33% in the second quarter.
Financial Position (as of Jun 30, 2023)
American International exited the second quarter with a cash balance of $2,283 million, which increased from $2,043 million at 2022-end. Total assets of $537.1 billion increased from $522.2 billion at 2022-end.
Short and long-term debt of $21.4 billion rose from $21.3 billion at the prior-year end.
Total equity rose to $46.5 billion from $43.5 billion at the prior-year end. Total debt and preferred stock to total capital was 32.3% at the second-quarter end.
Adjusted book value per share was $75.76, up from $73.78 a year ago.
Share Repurchase & Dividend Update
American International rewarded its shareholders with $554 million in repurchases and dividends worth $268 million. The company increased its quarterly dividend by 12.5% to 36 cents per share.
AIG’s board of directors increased share repurchase authorization to $7.5 billion on Aug 1.
Zacks Rank
AIG currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate. Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 EPS of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.