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American International Group (AIG): Q4 Earnings Preview

We expect American International Group, Inc.AIG to beat earnings expectations when it reports fourth-quarter and full-year 2016 results, on Feb 14, after the market close.

Why a Likely Positive Surprise?

Our proven model shows that AIG has the right combination of the two key ingredients to beat on earnings.

Zacks ESP:Earnings ESP ,, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +3.23%. This is a major indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: AIG carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates.

The combination of AIG's favorable Zacks Rank and positive ESP makes us confident of an earnings beat this time around.

Factors to Influence Q4 Results

AIG's fourth-quarter earnings are expected to bear the brunt of losses from Hurricane Matthew. The company's early estimate for these losses are pegged at about $250 million, roughly two-third of which relates to the Commercial segment and one-third relates to the Consumer segment.

The company's Retirement segment is likely to see lower sales from the year-ago quarter, reflecting an industry-wide slowdown in variable annuity sales from the uncertainty caused by the DOL fiduciary rule and market volatility.

AIG's International Life sales are likely to have been driven by growth in U.S. Life sales reflecting focus on term life, in which the insurer remained among the top five term writers and the number one in direct term sales in the first six months of 2016. Change in product mix demonstrates the company's commitment to new business as AIG has increased focus on products without long-duration interest rate guarantees. Positive sales trends at Life also reflect the evolution of the company's distribution strategy and developments of its independent distribution network.

The company efforts toward saving costs will accrue to its bottom line. Through the first nine months of 2016, the company achieved a 10% decline in gross operating expenses.

Operating improvements made by the company coupled with return of capital will continue to positively impact ROE. The company is on track to deliver full-year normalized ROE in its targeted range of 8.4% to 8.9%.

American International Group, Inc. Price and EPS Surprise

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

Other Stocks That Warrant a Look

Here are some other companies that you may consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

MRC Global Inc. MRC has an Earnings ESP of +45.45% and a Zacks Rank #3. The company is expected to report fourth-quarter and 2016 earnings results on Feb 16.

MFA Financial Inc. MFA will report fourth-quarter and full-year 2016 earnings results on Feb 16. The company has an Earnings ESP of +10% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Allscripts Healthcare Solutions, Inc. MDRX has an Earnings ESP of +8.33% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings results on Feb 16.

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Allscripts Healthcare Solutions, Inc. (MDRX): Free Stock Analysis Report

American International Group, Inc. (AIG): Free Stock Analysis Report

MFA Financial, Inc. (MFA): Free Stock Analysis Report

MRC Global Inc. (MRC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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