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AIG Earnings and Revenues Fall Short of Estimates in Q1

Zacks Equity Research

American International Group Inc.'s AIG first-quarter 2020 operating earnings of 11 cents per share missed the Zacks Consensus Estimate by 86.75%. The bottom line also declined from the year-ago quarter's earnings of $1.58 per share.

Total revenues of $10.92 billion declined 15.3% year over year and also missed the Zacks Consensus Estimate by 5.63% due to lower premiums and weak net investment income.

Total net investment income of $2.5 billion plunged 36% year over year
Total benefit expenses of $11.9 were up 5.2% year over year due to higher amortization of deferred policy acquisition costs.

The company incurred a catastrophe loss of $419 million, deteriorating 139.5% year over year. The reported quarter’s catastrophe loss included $272 million of estimated COVID-19 losses and the rest was related to weather-related loss.

Adjusted return on equity was 0.8% compared with 11.6% in the year-ago quarter.

As of Mar 31, 2020, the insurer’s adjusted book value per share (excluding AOCI) was $60.55, up 3% from the level as of Dec 31, 2019.

American International Group, Inc. Price, Consensus and EPS Surprise

American International Group, Inc. Price, Consensus and EPS Surprise

American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote

Strong Segmental Results

General Insurance

Net premium written of $5.9 billion was down 2% year over year due to lower premiums in and international business, partly offset by higher North America premiums.

The segment reported an underwriting loss of $87 million against an underwriting gain of $179 million in the prior-year quarter. Combined ratio of 101.5 deteriorated 410 basis points due to intensified catastrophe losses.

Life and Retirement

Premium and fees inched up 1% year over year to $1.95 billion, led by solid contribution from Individual Retirement, Group Retirement and Life Insurance, partly offset by lower contribution from Institutional Market.

The segment reported adjusted pre-tax income of $574 million, down 38% year over year due to dwindled contribution from Group, Life and Individual sub-segments.

Financial Position

As of Mar 31, 2020, the company had long-term debt of $25.3 billion, down 5.2% year over year. Total assets of $510.5 billion dipped 0.5% year over year. Shareholder equity was $47 billion, up 98% year over year.

Share Buyback Update

The company repurchased shares worth $500 million. As of Mar 31, 2020, it has $1.5 billion remaining under its share buyback authorization.

AIG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players in the insurance space that already reported first-quarter earnings, the bottom-line results of Principal Financial Group PFG, The Progressive Corp. PGR and The Travelers Companies TRV missed respective estimates by 3.36%, 19.3% and 9.03%.

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