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Why Is American International Group (AIG) Up 9.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for American International Group (AIG - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American International Group due for a pullback? 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 catalysts.
AIG Q4 Earnings Beat Estimates on General Insurance Strength
American International Group reported fourth-quarter 2023 adjusted earnings per share of $1.79, which outpaced the Zacks Consensus Estimate by 12.6%. The bottom line jumped 31.6% year over year.
Operating revenues inched up 4.6% year over year to $12.7 billion in the quarter under review. The top line beat the consensus mark by 9.7%.
The strong quarterly results were aided by strong underwriting results in the International business and North America Personal Insurance business of the General Insurance unit and higher net investment income. However, the upside was partly offset by higher expenses as well as reduced sales of Variable Annuities in the Life and Retirement unit and lower financial lines premiums in the General Insurance.
Quarterly Operational Update
Premiums fell 9.9% year over year to $8.5 billion in the fourth quarter. Total net investment income of $3.9 billion climbed 20.7% year over year and beat the consensus mark by 11.7% and our estimate by 8.9%. The metric benefited on the back of improved reinvestment rates partially offset by lower alternative investment income.
Total benefits, losses and expenses of American International inched up 0.7% year over year to $11.2 billion. The increase was due to a rise in policyholder benefits and losses incurred.
Adjusted return on common equity of 9.4% improved 190 basis points (bps) year over year in the quarter under review.
American International completed two secondary offerings of Corebridge in the fourth quarter of 2023, reducing its stake to 52.2%. It expects to complete the deconsolidation of Corebridge in 2024.
Segmental Performances
General Insurance
Net premiums written amounted to $5.8 billion in the fourth quarter, which grew 2.6% year over year. The metric was aided by rate increases, strong retention rates and new business growth in Lexington and Global Specialty. However, the metric lagged the Zacks Consensus Estimate by 16.7%.
Underwriting income increased 1.1% year over year to $642 million in the quarter under review, attributable to strength in International Commercial lines and Personal insurance. Catastrophe losses totaled $122 million, down from $248 million a year ago. The unit’s combined ratio of 89.1% improved 80 bps year over year due to an improvement in the loss ratio.
Adjusted pre-tax income was $1.4 billion, which soared 18.6% year over year and surpassed the consensus mark by 8.8% and our estimate by 10.2%. The metric was driven by improved underwriting income, lower catastrophe-related charges and higher net investment income.
Life and Retirement
The segment’s premiums and fees were recorded at $3.2 billion in the fourth quarter, which increased 13.6% year over year. Premiums improved due to improved pension risk transfer volumes. Premiums and deposits advanced 20.3% year over year to $10.6 billion.
Adjusted revenues of the unit were $6 billion, which improved 13.9% year over year in the quarter under review and surpassed the Zacks Consensus Estimate by 24.2%.
The unit reported an adjusted pre-tax income of $957 million, which rose 12.3% year over year on the back of higher base portfolio yields, partially offset by higher mortality in life insurance and reduced alternative asset income. The metric beat the consensus mark by 1.1%.
Financial Position (as of Dec 31, 2023)
American International exited the fourth quarter with a cash balance of $2.2 billion, which improved from $2 billion at 2022-end. Total assets of $539.3 billion improved from $522.2 billion at 2022-end.
Short and long-term debt amounted to $19.8 billion, down from $21.3 billion at 2022-end.
Total equity of $51.3 billion increased from $43.5 billion at 2022-end. Total debt and preferred stock to total capital was 28.5% at the fourth-quarter end.
Adjusted book value per share was $76.65, which grew 1% year over year in the quarter under review.
Capital Deployment Update
American International rewarded shareholders with $1 billion in repurchases and dividends worth $256 million.
Full-Year Update
American International’s 2023 total revenues of $46.8 billion decreased from $54.5 billion in 2022. However, adjusted earnings of $6.79 per share improved from $5.12 a year ago. Total benefits, losses and expenses increased to $42.9 billion in 2023 from $40.2 billion in 2022. Net income declined to $3.9 billion from $11.3 billion a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, American International Group has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, American International Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American International Group is part of the Zacks Insurance - Multi line industry. Over the past month, CNO Financial (CNO - Free Report) , a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
CNO reported revenues of $1.17 billion in the last reported quarter, representing a year-over-year change of +20.2%. EPS of $1.18 for the same period compares with $0.56 a year ago.
CNO is expected to post earnings of $0.71 per share for the current quarter, representing a year-over-year change of +39.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for CNO. Also, the stock has a VGM Score of B.
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Why Is American International Group (AIG) Up 9.1% Since Last Earnings Report?
A month has gone by since the last earnings report for American International Group (AIG - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American International Group due for a pullback? 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 catalysts.
AIG Q4 Earnings Beat Estimates on General Insurance Strength
American International Group reported fourth-quarter 2023 adjusted earnings per share of $1.79, which outpaced the Zacks Consensus Estimate by 12.6%. The bottom line jumped 31.6% year over year.
Operating revenues inched up 4.6% year over year to $12.7 billion in the quarter under review. The top line beat the consensus mark by 9.7%.
The strong quarterly results were aided by strong underwriting results in the International business and North America Personal Insurance business of the General Insurance unit and higher net investment income. However, the upside was partly offset by higher expenses as well as reduced sales of Variable Annuities in the Life and Retirement unit and lower financial lines premiums in the General Insurance.
Quarterly Operational Update
Premiums fell 9.9% year over year to $8.5 billion in the fourth quarter. Total net investment income of $3.9 billion climbed 20.7% year over year and beat the consensus mark by 11.7% and our estimate by 8.9%. The metric benefited on the back of improved reinvestment rates partially offset by lower alternative investment income.
Total benefits, losses and expenses of American International inched up 0.7% year over year to $11.2 billion. The increase was due to a rise in policyholder benefits and losses incurred.
Adjusted return on common equity of 9.4% improved 190 basis points (bps) year over year in the quarter under review.
American International completed two secondary offerings of Corebridge in the fourth quarter of 2023, reducing its stake to 52.2%. It expects to complete the deconsolidation of Corebridge in 2024.
Segmental Performances
General Insurance
Net premiums written amounted to $5.8 billion in the fourth quarter, which grew 2.6% year over year. The metric was aided by rate increases, strong retention rates and new business growth in Lexington and Global Specialty. However, the metric lagged the Zacks Consensus Estimate by 16.7%.
Underwriting income increased 1.1% year over year to $642 million in the quarter under review, attributable to strength in International Commercial lines and Personal insurance. Catastrophe losses totaled $122 million, down from $248 million a year ago. The unit’s combined ratio of 89.1% improved 80 bps year over year due to an improvement in the loss ratio.
Adjusted pre-tax income was $1.4 billion, which soared 18.6% year over year and surpassed the consensus mark by 8.8% and our estimate by 10.2%. The metric was driven by improved underwriting income, lower catastrophe-related charges and higher net investment income.
Life and Retirement
The segment’s premiums and fees were recorded at $3.2 billion in the fourth quarter, which increased 13.6% year over year. Premiums improved due to improved pension risk transfer volumes. Premiums and deposits advanced 20.3% year over year to $10.6 billion.
Adjusted revenues of the unit were $6 billion, which improved 13.9% year over year in the quarter under review and surpassed the Zacks Consensus Estimate by 24.2%.
The unit reported an adjusted pre-tax income of $957 million, which rose 12.3% year over year on the back of higher base portfolio yields, partially offset by higher mortality in life insurance and reduced alternative asset income. The metric beat the consensus mark by 1.1%.
Financial Position (as of Dec 31, 2023)
American International exited the fourth quarter with a cash balance of $2.2 billion, which improved from $2 billion at 2022-end. Total assets of $539.3 billion improved from $522.2 billion at 2022-end.
Short and long-term debt amounted to $19.8 billion, down from $21.3 billion at 2022-end.
Total equity of $51.3 billion increased from $43.5 billion at 2022-end. Total debt and preferred stock to total capital was 28.5% at the fourth-quarter end.
Adjusted book value per share was $76.65, which grew 1% year over year in the quarter under review.
Capital Deployment Update
American International rewarded shareholders with $1 billion in repurchases and dividends worth $256 million.
Full-Year Update
American International’s 2023 total revenues of $46.8 billion decreased from $54.5 billion in 2022. However, adjusted earnings of $6.79 per share improved from $5.12 a year ago. Total benefits, losses and expenses increased to $42.9 billion in 2023 from $40.2 billion in 2022. Net income declined to $3.9 billion from $11.3 billion a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, American International Group has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, American International Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American International Group is part of the Zacks Insurance - Multi line industry. Over the past month, CNO Financial (CNO - Free Report) , a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
CNO reported revenues of $1.17 billion in the last reported quarter, representing a year-over-year change of +20.2%. EPS of $1.18 for the same period compares with $0.56 a year ago.
CNO is expected to post earnings of $0.71 per share for the current quarter, representing a year-over-year change of +39.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for CNO. Also, the stock has a VGM Score of B.