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American International (AIG) Q2 Earnings Miss Estimates

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American International Group Inc. (AIG - Free Report) reported second-quarter 2018 operating earnings of $1.05 per share, missing the Zacks Consensus Estimate by 11.8%. Also, in the year-ago quarter, the company’s bottom line came in at $1.53.

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This underperformance stemmed from lower net investment income as well as a weak performance by the General Insurance segment.

Weak General Insurance Segment Performance

General Insurance segment came up with a low pre-tax income of $568 million due to lower net investment income. Underwriting loss of $89 million included catastrophe loss faced by the segment.

Net premium written of $6.9 billion was up 5% year over year.

Combined ratio of 101.3% deteriorated 360 basis points year over year, primarily due to an increase in the accident year loss ratio.

Life and Retirement Unit Results

The segment reported a second-quarter adjusted pre-tax income of $962 million, down 3% year over year. However, premium and fees of $1.2 billion increased 2% year over year, primarily driven by high levels of assets under administration in Individual Retirement and Group Retirement.

Share Repurchase

In the second quarter, AIG repurchased 6.5 million common shares for $348 million and warrants for $2 million. As of Aug 2, 2018, approximately $1.5 billion worth of shares remained under the company’s repurchase authorization.

Financial Position

As of Jun 30, 2018, the insurer’s adjusted book value per share (excluding AOCI) was $57.34, up 2.2% from the Dec 31, 2017-level.

Core adjusted return on equity (ROE) was 8.2%, down 230 basis points year over year.

As of Jun 30, 2018, the company stood with liquidity and capital of around $9.3 billion. In the second quarter, the parent company received around $1.8 billion of distributions from insurance subsidiaries in the form of cash and fixed maturity securities.

Zacks Rank and Stocks to Consider

AIG carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurers having reported second-quarter earnings so far, the bottom line of Torchmark Corp. (TMK - Free Report) , Aflac Inc. (AFL - Free Report) and Genworth Financial Inc. (GNW - Free Report) beat the respective second-quarter estimates.

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