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Why Is American International Group (AIG) Up 7% Since Last Earnings Report?

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It has been about a month since the last earnings report for American International Group (AIG - Free Report) . Shares have added about 7% 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 Q1 Earnings Beat Estimates

American International Group Inc. posted first-quarter 2019 operating income of $1.58 per share, beating the Zacks Consensus Estimate for earnings by 47%. In the year-ago quarter, the company had posted earnings of $1.04 per share.

The recent results reflect strong gains in the company’s General Insurance and Life and Retirement segments.

Total revenues of $12.5 billion were up 6.8% year over year.

Total net investment income of $3.9 billion increased 19% year over year due to favorable performance in the equity markets and narrowing of spreads in the credit markets.

Total benefit expenses of $11.3 was up 8.1% year over year, due to higher policy holder benefit and losses.
Strong Segment Results

General Insurance

Net premium written of $6 billion was down 2.2% year over year, due to a decrease in premium international business, partly offset by higher premium written in the North America business.

The segment reported underwriting income of $179 million, compared with an underwriting loss of $251 million in the year-ago quarter. Combined ratio of 97.4% improved 640 basis points, due to a decline in both expense ratio and loss ratio.

Life and Retirement

The segment reported fourth-quarter adjusted income of $711 million, up 1.3% year over year, attributable to strong results at Life and Retirement and Life Insurance sub-segments. Total revenues of $4.2 billion were up 21.5% year over year primarily due to higher contribution from Institutional Markets and Life and Retirement market.

Financial Position

As of Mar 31, 2019, the insurer’s adjusted book value per share (excluding AOCI) was $66.89, down 1.1% year over year.

Core adjusted return on equity was 13.4%, compared with 8.6% a year ago.

As of Mar 31, 2019, the company had long-term debt of $35.8 billion, up 6.5% year over year.

Total assets of $512 billion, as of Mar 31, 2019, were up 2.8% year over year.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, American International Group has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise American International Group has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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