01—Abstract
Summary
Summary of the 10-K filed February 15, 2019. Cited figures are marked; the original filing is the authoritative source.
American International Group, Inc. (AIG) reported its financial results for the year ended December 31, 2018.
The company continued to execute its strategy focused on profitable growth by enhancing underwriting capabilities, optimizing reinsurance structures, and investing in talent. AIG highlighted a diverse mix of businesses, including General Insurance and Life and Retirement segments, with operations spanning over 80 countries. The company experienced a net loss attributable to AIG of $6 milliona in 2018, a significant improvement from the $6,084 million net loss in 2017.
This improvement was primarily driven by lower catastrophe losses and reduced unfavorable prior year loss reserve development in the General Insurance segment, along with lower net realized capital losses. However, lower investment returns and higher general operating expenses, partially due to acquisitions, impacted profitability. The company also completed several strategic acquisitions in 2018, including Validus and Glatfelter Insurance, to strengthen its offerings and market position.
02—Key points
Key Highlights
- AIG reported a net loss attributable to AIG of $6 million for the year ended December 31, 2018, an improvement from a net loss of $6,084 million in 2017.
- General Insurance segment experienced reduced losses, driven by lower catastrophe losses and less unfavorable prior year loss reserve development.
- Life and Retirement segment's adjusted pre-tax income decreased due to lower investment returns and unfavorable actuarial assumption updates, partially offset by higher policy fees and other income.
- The company completed several strategic acquisitions in 2018, including Validus and Glatfelter Insurance, to enhance its General Insurance business.
- AIG's total revenues for 2018 were $47.4 billion, a decrease from $49.5 billion in 2017, largely due to lower net investment income and other income.
- The company continued to manage its capital through share repurchases and dividends, authorizing an additional $1.5 billion to its share repurchase program in February 2019.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 15, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $47.39B$49.52B | −4.3% |
| SG&A Expenses | $9.30B$9.11B | +2.1% |
| Operating Income | $36.00M-$6.09B | +100.6% |
| Interest Expense | $1.31B$1.17B | +12.1% |
| Net Income | -$6.00M-$6.08B | +99.9% |
| EPS (Basic) | $-0.01$-6.54 | +99.8% |
| EPS (Diluted) | $-0.01$-6.54 | +99.8% |
| Shares Outstanding (Basic) | 898.41M930.56M | −3.5% |
| Shares Outstanding (Diluted) | 910.14M930.56M | −2.2% |
05—Questions
Frequently Asked Questions
What was AIG's financial performance in 2018?
AIG reported a net loss attributable to AIG of $6 million for the year ended December 31, 2018. This represents a significant improvement compared to the net loss of $6,084 million in 2017. Total revenues were $47.4 billion, down from $49.5 billion in 2017, mainly due to lower investment income and other income.
What were the key drivers of AIG's improved net income in 2018?
The improvement was primarily driven by lower catastrophe losses and reduced unfavorable prior year loss reserve development in the General Insurance segment. Additionally, net realized capital losses were lower in 2018 compared to 2017. Partially offsetting these improvements were lower investment returns and higher general operating expenses, influenced by recent acquisitions.
What major strategic initiatives did AIG undertake in 2018?
AIG continued to focus on its strategy of profitable growth by improving underwriting capabilities and optimizing reinsurance structures. In 2018, the company completed several strategic acquisitions, including Validus and Glatfelter Insurance, to strengthen its General Insurance business. It also completed a reorganization of its European operations in anticipation of Brexit and made progress in consolidating its legacy insurance lines into Fortitude Re.
How did AIG's business segments perform in 2018?
The General Insurance segment saw reduced losses due to lower catastrophe losses and prior year development, though severe losses and higher expenses impacted the North America segment. The Life and Retirement segment experienced a decrease in adjusted pre-tax income due to lower investment returns and actuarial assumption updates, but continued to focus on client-centric solutions and operational enhancements.
06—Continue