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AIG Q4 loss narrows but misses estimates, stock falls

American International Group (AIG) reported a narrower loss in the fourth quarter helped by an income tax benefit compared to an expense in the previous year. The results missed analysts’ expectations. Following this, the stock inched down over 3% in the after-market session.

Net loss was $622 million or $0.70 per share, narrower than the previous year’s loss of $6.7 billion or $7.33 per share. Adjusted loss was $0.63 per share compared to a profit of $0.57 per share a year ago. The adjusted results were hurt by claims from policyholders who suffered losses in typhoons in Asia and the US.

Total net investment income dropped by 20% as it was significantly impacted by market performance. Net investment income from its insurance companies, including the Legacy insurance portfolios, decreased 18.1% due to the net losses on alternative and equity securities.

Net catastrophe losses were $630 million or $0.71 per share for the fourth quarter, which was consistent with the previously disclosed range.

American International Group fourth quarter 2018 earnings snapshot

The results showed positive improvements in General Insurance, reflecting actions the company took throughout the year to reposition and strengthen the business, and Life and Retirement remains a stable source of earnings with attractive returns. Results were negatively impacted by performance in both equity and credit markets, catastrophe losses, as well as modest net unfavorable prior year loss reserve development.

During the quarter, total premium and deposits rose by 2.5% to $8.2 billion. AIG’s book value per share plunged to $65.04 from $72.49 in the fourth quarter of 2017. In mostly all the business segments, underwriting loss widened compared to last year.

Separately, the company’s board of directors declared a quarterly dividend of $0.32 per share on AIG Common Stock, par value $2.50 per share. The dividend is payable on March 29, 2019, to stockholders of record at the close of business on March 15, 2019.

Shares of AIG ended Wednesday’s regular session up 0.80% at $44.18 on the NYSE. The stock has fallen over 25% in the past year while it has risen over 4% in the past three months.

 

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