American International Group Inc.
) reported first-quarter 2013 operating earnings per share of
$1.34, significantly beating the Zacks Consensus Estimate of 88
cents. However, earnings fell from the year-ago quarter's $1.62
per share. Consequently, operating net income plunged to $1.98
billion from $3.05 billion in the year-ago quarter.
On a GAAP basis, including extraordinary items, AIG reported a
quarterly net income of $2.21 billion or $1.49 per share as
compared with $3.21 billion or $1.71 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
Results reflected operating growth in the insurance businesses
along with stronger underwriting results, lower expenses and
higher profitability in Direct Investment Book (DIB). These
factors also drove book value per share and combined ratio, while
enhancing capital efficiency. However, higher interest expenses,
lower investment income and lower return on equity (ROE) were the
partial dampeners. Volatile equity markets, widening credit
spreads and reduced interest rates were the other downsides.
Total revenue decreased 9.2% year over year to $15.89 billion,
although it surpassed the Zacks Consensus Estimate of $12.55
billion. Meanwhile, total benefits, claims and expenses
marginally increased 0.2% to $13.06 billion.
AIG Property Casualty
(P&C) - conducted through Chartis and its sub-segments:
Commercial & Consumer Insurance - reported an operating
income of $1.6 billion, up 76.3% from $910 million in the
year-ago quarter. The year-over-year upside was a result of lower
claims and acquisition expenses, which led to an underwriting
income of $231 million against a loss of $180 million in the
year-ago quarter. Moreover, investment income increased 11% to
However, net premiums written dipped 4.3% year over year to
$8.4 billion on the back of unfavorable currency and the effect
of recognizing ceded premiums written for excess of loss
reinsurance agreements at the beginning of the contract rather
than over the entire period of the contract. Excluding this
factor, net premiums written increased 4% year over year during
the reported quarter.
Both the commercial and consumer insurance segments reported
operating income on account of high value business mix as well as
enhanced risk selection and pricing initiatives. Subsequently,
combined ratio improved to 97.3% from 102.1% in the year-ago
Operating income at
AIG Life and Retirement
(conducted through SunAmerica) escalated 82.1% year over year to
$1.57 billion based on higher premiums and policy fees as well as
lower mortality costs and positive spreads. These were partially
offset by lower net investment income, base yields and interest
crediting rates. Additionally, AUM rose 12% year over year to
$297 billion as of Mar 31, 2013.
Additionally, premiums, deposits and other considerations
stood flat at $5.6 billion. A significant decline in fixed
annuities amid the low rate environment was offset by improvement
in variable annuities. Meanwhile, retail and institutional
segments witnessed modest improvement.
reported operating loss of $152 million versus an income of $2.3
billion in the year-ago period. Within this, Mortgage Guaranty -
conducted through United Guaranty Corporation (UGC) - recorded an
operating income of $41 million, higher than $8 million in the
year-ago quarter, driven by increased mortgage originations as
well as new and expanded distribution channels. Consequently, net
premiums written rose 28.8% year over year to $246 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 $329
million against a loss of $156 million in the year-ago
Global Capital Markets, consisting of AIG Markets Inc. and the
remaining AIGFP derivatives portfolio, recorded an operating
income of $227 million, significantly improving from $92 million
in the year-ago quarter.
At the end of Mar 2013, total investments stood at $369.7
billion, down from $375.8 billion at 2012-end. Total cash
increased to $1.23 billion from $1.15 billion at 2012-end, while
long-term debt declined to $45.3 billion from $48.5 billion at
Shareholder equity totaled $99.5 billion, up from $98.0
billion at the end of 2012, whereas total assets marginally
increased to $548.9 billion from $548.6 billion at 2012-end.
At the end of Mar 2013, AIG's book value per common share,
including accumulated other comprehensive income, escalated 16.9%
year over year to $67.41. However, operating ROE reduced to 9.2%
from 12.8% in the year-ago period.
Along with AIG, its peers
Prudential Financial Inc.
) carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
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