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American International (AIG) Beats on Q2 Earnings & Revenues

Zacks Equity Research

American International Group Inc. AIG posted second-quarter 2019 operating income of $1.43 per share, which beat the Zacks Consensus Estimate by 22% and increased 36% year over year.

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

Total revenues of $12.6 billion were up 8% year over year and surpassed the Zacks Consensus Estimate by 3.3%.

Total net investment income of $3.74 billion increased 22% year over year, due to favorable market performance and noteworthy income within the private equity portfolio.

Total benefit expenses of $11.3 was up 3.3% year over year, due to higher policy holder benefit and losses.

Adjusted return on equity was 11.6%, up 340 basis points year over year.

As of Jun 30, 2019, the insurer’s adjusted book value per share (excluding AOCI) was $56.89, down 0.7% year over year.

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 Segment Results

General Insurance

Net premium written of $6.6 billion was down 6% year over year, due to a decline in premium international business, partly offset by higher premium written in the North America business.

The segment reported underwriting income of $147 million, compared with an underwriting loss of $89 million in the year-ago quarter. Combined ratio of 97.8% improved 350 basis points, due to decline in both expense ratio and loss ratio.

Life and Retirement

The segment reported adjusted income of $804 million, up 7.7% year over year, attributable to strong results at Life and Retirement and Life

Insurance sub-segments. Total revenues of $3.8 billion were up 10% year over year primarily due to higher contribution from Institutional Markets, Life Insurance and Group Retirement market.

Financial Position

As of Jun 30, 2019, the company had long-term debt of $36.3 billion, up 7.4% year over year.

Total assets of $522 billion, as of Jun 30, 2019, were up 5.2% year over year.

Our Take

AIG results reflect successful execution of  strategies by managment over the past two to three years. Underwriting and expense management at General Insurance business has helped the company to post profits for the second consecutive quarter, after sustaining losses for the past many quarters. Life and Retirement segment is also performing well. We believe the company is out of troubles now and poised for long-term growth.

Zacks Rank  and Other Companies Performance

AIG carries a Zacks Rank #3 (Hold). Among the other stocks that have reported second-quarter results so far, the bottom line of Aflac Inc. AFL, W.R. Berkely, Corp. WRB and The Allstate Corp. ALL have surpassed their Zacks Consensus Estimate by 5.6%, 28.13% and 47.3%, respectively.

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

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