American International Group Inc. AIG reported second-quarter 2015 operating earnings per share of $1.39, which surpassed the Zacks Consensus Estimate of $1.22. Earnings improved 13% year over year.
The quarter’s earnings benefitted from higher pre-tax operating earnings of AerCap Holdings N.V. and the fair value of PICC Property & Casualty Company Limited and People’s Insurance Company of China Limited investments, partially offset by a decrease in income from insurance operations.
Behind the Headlines
Pre-tax operating income at Commercial Insurance declined 6.3% year over year to $1.5 billion due to lower underwriting results from Property Casualty as well as Mortgage Guaranty. However, lower net investment income from the Property Casualty and Mortgage Guaranty segments limited the upside.
Pre-tax operating income at Consumer Insurance declined 9.1% year over year to $1 billion. The decline stemmed from lower net investment income and a less favorable mortality experience in Life segment.
Financial Update
Shareholders’ equity totaled $104.3 billion at Jun 30, 2015, down from $106.9 billion at the end of 2014.
Cash, short-term investments, and unencumbered fixed maturity securities totaled $13.6 billion compared with $9.8 billion as of 2014 end.
In the quarter, AIG issued $2.79 billion of Notes.
At quarter end, AIG’s reported book value excluding per common share rose 9.3% year over year to $73.91. Operating return on equity improved to 9.3% from 9.1% in the year-ago quarter.
Share Buyback and Dividend Increase
AIG repurchased approximately $2.3 billion in shares during the second quarter. Encouraged by better-than-expected second-quarter earnings, AIG authorized the repurchase of additional shares of up to $5.0 billion. It also announced a 124% increase in the quarterly dividend to 28 cents per share. The dividend is payable on Sep 28, to stockholders of record at the close of business on Sep 14.
Zacks Rank
Currently, AIG carries a Zacks Rank #3 (Hold).
Performance of Other Multi-Line Insurers
The bottom line at MetLife, Inc. MET, Prudential Financial, Inc. PRU and American Financial Group Inc. AFG outperformed their respective Zacks Consensus Estimate in the second quarter.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment