It has been about a month since the last earnings report for American International Group, Inc. (AIG - Free Report) . Shares have lost about 3.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is AIG due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AIG Q1 Earnings Miss Estimates & Fall Y/Y, Shares Decline
American International Group Inc. reported first-quarter 2018 operating earnings of $1.04 per share that missed the Zacks Consensus Estimate by 16%. In the year-ago quarter, the company had reported earnings of $1.36 per share.
The underperformance stemmed from the impact of huge catastrophe losses and low premium in the General Insurance as well as Life and Retirement segments.
Weak Segment Performance
General Insurance Suffers From Catastrophe Loss
The segment was saddled with $376 million of losses primarily related to the California mudslides, U.S. winter storms and the Papua New Guinea earthquake, as well as $135 million of severe losses that led to an underwriting loss of $251 million compared with $12 million of underwriting income in the year-ago quarter.
Net premium written of $6.2 billion was also down 2% year over year due to the net impact of the company’s reinsurance program and the strategic portfolio actions in U.S. Casualty and Property.
Combined ratio of 103.8% deteriorated a massive 400 basis points year over year, primarily due to an increase in loss ratio, which stemmed from huge catastrophe losses.
Disappointing Life and Retirement Unit Results
Premium and fees of $1.18 billion decreased 23% year over year, led by an 80% decline in contribution from the Institutional Market sub segment.
Pre-tax income, was also down 1% from the prior-year quarter to $892 million.
In the first quarter, AIG repurchased 5.4 million common shares for $298 million and warrants for $2 million. As of May 2, 2018, approximately $2.0 billion remained under the share repurchase authorization.
At the end of the first quarter, the insurer’s adjusted book value per share (excluding AOCI) was $56.10, up 2.5% from the Dec 31, 2017 level.
Core adjusted return on equity (ROE) was 8.6%, down 160 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter.
Currently, AIG has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
The company's stock is suitable soley for value based on our styles scores.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise AIG has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.