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Can AIG Q3 Earnings Beat on Strong General Insurance Growth?
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American International Group, Inc. (AIG - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Nov 1, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $1.55 has witnessed one upward revision in the past month against no movement in the opposite direction. The estimate is indicative of a 134.9% increase from the year-ago quarter’s reported earnings of 66 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $12.6 billion, suggesting a rise of 11.4% from the year-ago quarter’s reported figure.
AIG’s earnings beat estimates in all the trailing four quarters, with an average surprise of 13.5%. This is depicted in the graph below.
American International Group, Inc. Price and EPS Surprise
Our proven model predicts a likely earnings beat for American International this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
Earnings ESP: AIG has an Earnings ESP of +4.02%. This is because the Most Accurate Estimate is currently pegged at $1.62 per share, higher than the Zacks Consensus Estimate of $1.55. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at AIG’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the leading global insurance organization’s adjusted operating earnings of $1.75 per share beat the Zacks Consensus Estimate by 13.6% due to 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 the results.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
In the third quarter, improved retention, new business and continued growth in the insurance premium rate are expected to have boosted the performance of the General Insurance business. The Zacks Consensus Estimate for net premiums earned in General Insurance indicates a nearly 4% increase from the year-ago period, whereas our estimate suggests an almost 2% jump.
Profits from General Insurance are expected to have increased due to strong North America operations. The Zacks Consensus Estimate for adjusted pre-tax income of $1.1 billion for the third quarter indicates an increase of more than 50% from the year-ago period.
The effects of its transformative program, named AIG 200, are expected to have enabled the company to further curb costs and expense growth in the third quarter. This is likely to have provided the bottom line some breathing room in the quarter under review. Our model estimate for total expenses indicates around 10% year-over-year growth, which is significantly lower than the 21.5% and 16.6% year-over-year jump witnessed in the first and second quarter, respectively.
Also, the Zacks Consensus Estimate for net investment income indicates a 21.3% increase from the year-ago period, while our model predicts nearly 15% growth, thanks to a high interest environment. The factors stated so far are expected to have positioned AIG for year-over-year growth and an earnings beat.
AIG remains the majority shareholder in Corebridge (its Life and Retirement business), following the IPO last year and a secondary offering in June 2023 and combines its results of operations in its Condensed Consolidated Financial Statements. The consensus mark for adjusted pre-tax income for the overall Life and Retirement business is pegged at more than $1 billion, signaling a jump of nearly 30% from the prior-year quarter.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Finance space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Aflac Incorporated (AFL - Free Report) has an Earnings ESP of +0.62% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Aflac’s bottom line for the to-be-reported quarter is pegged at $1.44 per share, indicating 17.1% year-over-year growth. It has remained stable over the past week. AFL beat earnings estimates in each of the past four quarters, with an average surprise of 7.8%.
Trupanion, Inc. (TRUP - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank of 1.
The Zacks Consensus Estimate for Trupanion’s bottom line for the to-be-reported quarter indicates a 3.1% improvement from a year ago. The consensus estimate for revenues is pegged at $276.2 million, indicating an 18.2% increase from a year ago. TRUP beat earnings estimates in two of the past four quarters and missed twice.
KKR & Co. Inc. (KKR - Free Report) has an Earnings ESP of +2.24% and a Zacks Rank of 3.
The Zacks Consensus Estimate for KKR’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, which increased by 2 cents in the past month. KKR beat earnings estimates in all the past four quarters, with an average surprise of 7.5%.
Image: Bigstock
Can AIG Q3 Earnings Beat on Strong General Insurance Growth?
American International Group, Inc. (AIG - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Nov 1, after the closing bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $1.55 has witnessed one upward revision in the past month against no movement in the opposite direction. The estimate is indicative of a 134.9% increase from the year-ago quarter’s reported earnings of 66 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $12.6 billion, suggesting a rise of 11.4% from the year-ago quarter’s reported figure.
AIG’s earnings beat estimates in all the trailing four quarters, with an average surprise of 13.5%. This is depicted in the graph below.
American International Group, Inc. Price and EPS Surprise
American International Group, Inc. price-eps-surprise | American International Group, Inc. Quote
What the Quantitative Model Suggests
Our proven model predicts a likely earnings beat for American International this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
Earnings ESP: AIG has an Earnings ESP of +4.02%. This is because the Most Accurate Estimate is currently pegged at $1.62 per share, higher than the Zacks Consensus Estimate of $1.55. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: American International currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at AIG’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the leading global insurance organization’s adjusted operating earnings of $1.75 per share beat the Zacks Consensus Estimate by 13.6% due to 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 the results.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
In the third quarter, improved retention, new business and continued growth in the insurance premium rate are expected to have boosted the performance of the General Insurance business. The Zacks Consensus Estimate for net premiums earned in General Insurance indicates a nearly 4% increase from the year-ago period, whereas our estimate suggests an almost 2% jump.
Profits from General Insurance are expected to have increased due to strong North America operations. The Zacks Consensus Estimate for adjusted pre-tax income of $1.1 billion for the third quarter indicates an increase of more than 50% from the year-ago period.
The effects of its transformative program, named AIG 200, are expected to have enabled the company to further curb costs and expense growth in the third quarter. This is likely to have provided the bottom line some breathing room in the quarter under review. Our model estimate for total expenses indicates around 10% year-over-year growth, which is significantly lower than the 21.5% and 16.6% year-over-year jump witnessed in the first and second quarter, respectively.
Also, the Zacks Consensus Estimate for net investment income indicates a 21.3% increase from the year-ago period, while our model predicts nearly 15% growth, thanks to a high interest environment. The factors stated so far are expected to have positioned AIG for year-over-year growth and an earnings beat.
AIG remains the majority shareholder in Corebridge (its Life and Retirement business), following the IPO last year and a secondary offering in June 2023 and combines its results of operations in its Condensed Consolidated Financial Statements. The consensus mark for adjusted pre-tax income for the overall Life and Retirement business is pegged at more than $1 billion, signaling a jump of nearly 30% from the prior-year quarter.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Finance space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Aflac Incorporated (AFL - Free Report) has an Earnings ESP of +0.62% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Aflac’s bottom line for the to-be-reported quarter is pegged at $1.44 per share, indicating 17.1% year-over-year growth. It has remained stable over the past week. AFL beat earnings estimates in each of the past four quarters, with an average surprise of 7.8%.
Trupanion, Inc. (TRUP - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank of 1.
The Zacks Consensus Estimate for Trupanion’s bottom line for the to-be-reported quarter indicates a 3.1% improvement from a year ago. The consensus estimate for revenues is pegged at $276.2 million, indicating an 18.2% increase from a year ago. TRUP beat earnings estimates in two of the past four quarters and missed twice.
KKR & Co. Inc. (KKR - Free Report) has an Earnings ESP of +2.24% and a Zacks Rank of 3.
The Zacks Consensus Estimate for KKR’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, which increased by 2 cents in the past month. KKR beat earnings estimates in all the past four quarters, with an average surprise of 7.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.