01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
American International Group, Inc. (AIG) in 2015 operated as a diversified global insurance organization with two main segments: Commercial Insurance and Consumer Insurance.
The company generated total revenues of $58.3 billiona, with a net income attributable to AIG of $2.2 billion. A significant strategic focus for 2016 was announced in January 2016, aiming to create a leaner, more profitable, and focused insurer by reorganizing into modular business units and introducing a new Legacy Portfolio to maximize value from non-strategic assets. Key priorities for 2016 included improving Return on Equity (ROE), reducing general operating expenses, improving the Commercial Insurance Property Casualty accident year loss ratio, and returning excess capital to shareholders.
Financially, 2015 saw a decrease in pre-tax operating income for both Commercial Insurance and Consumer Insurance segments compared to 2014. Commercial Insurance was impacted by higher underwriting losses in Property Casualty due to adverse prior year loss reserve development and lower net investment income.
Consumer Insurance experienced lower net investment income, less favorable actuarial assumption updates, less favorable mortality in Life, and an underwriting loss in Personal Insurance. The company continued to focus on capital management, with $10.7 billionb repurchased in AIG Common Stock during 2015 and an increase in its share repurchase authorization.
02—Key points
Key Highlights
- AIG reported total revenues of $58.3 billion for the year ended December 31, 2015.
- Net income attributable to AIG was $2.2 billion, a significant decrease from $7.5 billion in 2014, impacted by adverse prior year loss reserve development in Commercial Property Casualty and lower net investment income.
- Commercial Insurance pre-tax operating income decreased substantially due to a $3.5 billion adverse prior year loss reserve development in Property Casualty.
- Consumer Insurance pre-tax operating income also decreased, primarily due to lower net investment income and less favorable actuarial assumptions.
- The company repurchased approximately $10.7 billion of AIG Common Stock in 2015 and announced an additional $5.0 billion repurchase authorization in February 2016.
- AIG announced a strategic reorganization in January 2016 to create a leaner, more focused insurer, including the introduction of a Legacy Portfolio.
- The company's capital and surplus for its insurance subsidiaries remained strong, exceeding minimum regulatory requirements.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $58.33B$64.41B | −9.4% |
| SG&A Expenses | $12.69B$13.14B | −3.4% |
| Operating Income | $2.20B$7.58B | −71.0% |
| Interest Expense | $1.28B$1.72B | −25.4% |
| Net Income | $2.20B$7.53B | −70.8% |
| EPS (Basic) | $1.69$5.27 | −67.9% |
| EPS (Diluted) | $1.65$5.20 | −68.3% |
| Shares Outstanding (Basic) | 1.30B1.43B | −9.0% |
| Shares Outstanding (Diluted) | 1.33B1.45B | −7.8% |
05—Questions
Frequently Asked Questions
What was AIG's net income for 2015?
AIG reported a net income attributable to AIG of $2.2 billion for the year ended December 31, 2015.
What factors impacted the decrease in profitability in 2015?
The decrease in profitability in 2015 was primarily attributed to higher underwriting losses in Commercial Insurance's Property Casualty segment due to adverse prior year loss reserve development, lower net investment income across segments, and less favorable actuarial assumptions and mortality experience in Consumer Insurance.
What is AIG's strategy moving forward into 2016?
AIG announced a strategy to become a leaner, more profitable, and focused insurer by reorganizing into modular business units, introducing a Legacy Portfolio to maximize value from non-strategic assets, reducing operating expenses, and improving the Commercial Insurance Property Casualty loss ratio, while also returning excess capital to shareholders.
How did AIG manage its capital in 2015?
In 2015, AIG repurchased approximately $10.7 billion of its common stock and paid dividends totaling $0.81 per share for the full year. The company also maintained strong capital and surplus levels in its insurance subsidiaries, exceeding regulatory requirements.
06—Continue