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What Awaits American International's (AIG) Q1 Earnings?

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·4 min read
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American International Group, Inc. AIG is scheduled to report first-quarter 2021 results on May 6, after the market closes.

In the last reported quarter, the company’s earnings of 94 cents per share missed the Zacks Consensus Estimate by 4.1%. The bottom line also declined 8.7% year over year due to higher catastrophe (CAT) loss including COVID-19 related loss as well as an unfavorable prior-year loss reserve development, partially offset by improved alternative investment returns.

Q1 Estimates

The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at 99 cents per share, indicating a surge of 800% from the year-ago quarter’s reported figure.

The consensus mark for quarterly revenues stands at $10.78 billion, suggesting a 4.3% decrease from the year-ago period’s reported number.

Factors to Note

Lower net investment income and incidence of catastrophe losses might have impacted the General Insurance segment’s performance in the quarter to be reported. Further, the COVID-induced adversities inflicted on travel, contingency and Validus Re are likely to have acted as a drag on the segment’s underwriting profit. The Zacks Consensus Estimate for this segment’s net premium written is pegged at $5.63 billion, which indicates a decline of 5% from the year-ago reported figure.

Under the company’s General Insurance segment, Commercial Insurance business is likely to have grown, driven by improved retention and higher rates. Whereas, performance in the Personal insurance lines might have remained weak due to higher business ceded to Syndicate 2019 along with the relentless ill-effects of the ongoing pandemic on travel, accident and health insurance business.

In the to-be-reported quarter, both corporate interest expense and gross operating expenses are expected to have decreased on debt repayments and lower corporate expenses.

Share repurchases made by the company are likely to have provided a cushion to its bottom line.

Earnings Surprise

The company’s bottom line missed estimates in three of the trailing four quarters, surpassing the mark in the remaining one. It has a trailing four-quarter negative earnings surprise of 15.42%, on average. This is depicted in the graph below:

American International Group, Inc. Price and EPS Surprise

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

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

What Our Quantitative Model Unveils

Our proven model predicts an earnings beat for American International this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.

Earnings ESP: American International has an Earnings ESP of +0.24%. This is because the Most Accurate Estimate of $1.02 is pegged higher than the Zacks Consensus Estimate of 98 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American International carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Some other insurance stocks with the right combination of elements to pull off an earnings beat this time around are:

Brighthouse Financial, Inc. BHF has an Earnings ESP of +1.72% and a Zacks Rank of 3, presently.

Voya Financial Inc. VOYA has an Earnings ESP of +1.77% and is presently Zacks #3 Ranked.

Sun Life Financial Inc. SLF has an Earnings ESP of +9.26% and is a #2 Ranked player at present.

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