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American International (AIG) Q4 Earnings Beat Estimates

Zacks Equity Research

American International Group, Inc. AIG posted fourth-quarter 2019 operating income of $1.03 per share, beating the Zacks Consensus Estimate by a penny. In the year-ago quarter, the company reported loss of 63 cents per share.

Total revenues of $11.8 billion were down 6.3% year over year and also missed the Zacks Consensus Estimate by 4.2%, due to lower premiums.

Total net investment income of $3.6 billion was up 28.6% year over year

Total benefit expenses of $10.8 were down 18.8% year over year, due to lower policy holder benefit and losses.

The company incurred catastrophe loss of $413 million, down 48.3% year over year.

Adjusted return on equity was 7.3%, compared with negative return on equity of 4.6% in the year-ago quarter.

As of Dec 31, 2019, the insurer’s adjusted book value per share (excluding AOCI) was $58.89, up 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 $5.8 billion was down 9% year over year, due to a decline in premium in North America and international business.

The segment reported underwriting gain of $12 million compared with underwriting loss of $1.1 billion in the prior-year quarter. Combined ratio of 99.8% improved 1520 basis points, due to lower catastrophe losses, continued underwriting actions, reinsurance and expense discipline.

Life and Retirement

The segment reported adjusted pre-tax income of $646 million, down 9.4% year over year, due to lower contribution from Group, Life and Individual Retirement subsegments.

Total revenues of $4 billion were down  2% year over year, primarily due to decline in contribution from Institutional Markets, partly offset by revenue growth in Individual retirement, Group retirement and Life Insurance businesses.

Financial Position (as of Dec 31, 2019)

The company had long-term debt of $25.5 billion, down 2.5% year over year. Total assets of $525.1 billion were up 6.7% year over year.
Shareholder equity was $51.2 billion, up 7.6% year over year.

Zacks Rank and Other Stocks

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 from the insurance industry having reported fourth-quarter earnings so far, the bottom-line results of Brown & Brown, Inc. BRO and RLI Corp. RLI beat estimates, while that of Principal Financial PFG met the same.

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