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-eps-surprise-chart | American International Group, Inc. Quote
Strong Segmental Results
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.
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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