American International (AIG) Q2 Earnings Miss Estimates
American International Group Inc. AIG 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.
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.
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).
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Among other insurers having reported second-quarter earnings so far, the bottom line of Torchmark Corp. TMK, Aflac Inc. AFL and Genworth Financial Inc. GNW beat the respective second-quarter estimates.
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