American International Group Inc.
) reported third-quarter 2013 operating earnings per share of 96
cents, comfortably beating the Zacks Consensus Estimate of 93
cents. However, results lagged the year-ago quarter figure of 99
cents per share. Subsequently, operating net income tumbled 12.3%
year over year to $1.42 billion.
On a GAAP basis, including extraordinary items, AIG reported a
quarterly net income of $2.17 billion or $1.46 per share as
compared with $1.86 billion or $1.13 per share in the year-ago
quarter. The year-ago results include pre-tax income from the
fair value of the AIA Group Ltd. (AIA) and Maiden III, totaling
Total revenue plunged 11.3% year over year to $14.83 billion,
but topped the Zacks Consensus Estimate of $10.1 billion.
Meanwhile, total benefits, claims and expenses edged down 3.7% to
AIG Property Casualty
(P&C) - conducted through Chartis and its sub-segments:
Commercial & Consumer Insurance - reported pre-tax income of
$1.03 billion, up 8.4% from $949 million in the year-ago quarter.
The upside was a result of lower claims, acquisition and
operating expenses that was partially offset by lower premiums
earned. Underwriting loss shrank to $135 million against $441
million in the year-ago quarter.
Meanwhile, investment income dipped 3.9% to $1.18 billion. Net
premiums written inched down 0.6% year over year to $8.66
Both the commercial and consumer insurance segments reported
higher premiums on account of high value business mix as well as
enhanced risk selection and pricing initiatives. While
catastrophe losses of $222 million reduced 14.9% year-over-year,
combined ratio improved to 101.6% from 105.0% in the year-ago
Reported pre-tax income at
AIG Life and Retirement
(conducted through SunAmerica) escalated 39.6% year over year to
$1.24 billion based on higher premiums and policy fees as well as
higher income across Retail and Institutional segments.
Additionally, AUM rose 10% year over year to $304.4 billion as of
Sep 30, 2013 driven by positive net flows.
Additionally, premiums, deposits and other considerations
spiked 76% year over year to $8.42 billion. A significant surge
in individual variable and fixed annuities as well as retail
mutual funds was witnessed due to effective spread
reported operating loss of $583 million versus income of $851
million in the year-ago period, primarily due to decline in net
credit and unrealized market valuations.
Within this, Mortgage Guaranty - conducted through United
Guaranty Corporation (UGC) - recorded an operating income of $43
million, substantially higher than $3 million in the year-ago
quarter, driven by increased mortgage originations as well as new
and expanded distribution channels. Consequently, net premiums
written rose 24% year over year to $272 million.
In addition, AIG's Direct Investment book (DIB), comprising
the Matched Investment Program (MIP) and the non-derivative
assets and liabilities of the previous AIG Financial Products
Corp. (AIGFP) portfolios, recorded operating income of $110
million compared with $428 million in the year-ago period.
Global Capital Markets, consisting of AIG Markets Inc. and the
remaining AIGFP derivatives portfolio, recorded an operating
income of mere $29 million, significantly deteriorating from $190
million in the year-ago quarter.
At the end of Sep 2013, total investments stood at $358.3
billion, down from $375.8 billion at 2012-end. Total cash
increased to $2.06 billion from $1.15 billion at 2012-end.
Meanwhile long-term debt declined to $42.2 billion from $48.5
billion at 2012-end based on effective liability management. This
also improved the total debt-to-capital ratio to 17.6% from 20.5%
Shareholder equity totaled $98.8 billion, up from $98.0
billion at the end of 2012, while total assets decreased to
$540.7 billion from $548.6 billion at 2012-end.
At the end of Sep 2013, AIG's book value per common share,
including accumulated other comprehensive income, fell 2.6% year
over year to $67.10. As well, operating ROE dipped to 6.2% from
7.0% in the year-ago period.
Capital Deployment Update
During the reported quarter, AIG bought back about 4.0 million
shares for $192 million. In Aug 2013, the board had authorized a
share repurchase program worth $1.0 billion, which will be
Additionally, the board of AIG announced a regular quarterly
dividend of 10 cents per share, payable on Dec 19, 2013, to
shareholders of record as on Dec 5, 2013.
In Aug 2013, AIG had initiated a regular quarterly dividend of
10 cents per share, which was paid on Sep 26, 2013 to
shareholders of record as on Sep 12, 2013. This marks the first
regular dividend since 2008. The last quarterly dividend was paid
for the third quarter of 2008.
Along with AIG,
) carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
ASSURANT INC (AIZ): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
To read this article on Zacks.com click here.