10-QPeriod: Q3 FY2013

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 31, 2013For Securities:AIG

Summary

American International Group, Inc. (AIG) reported a net income of $2.17 billion for the third quarter of 2013, a 17% increase from $1.86 billion in the same period of the previous year. This growth was driven by improved underwriting results in the AIG Property Casualty segment and higher fee income and spread management in AIG Life and Retirement. The company continued to strengthen its financial position by reducing debt by $7.6 billion in the first nine months of 2013 and authorized a $1.0 billion share repurchase program. However, net investment income saw a decline compared to the prior year, mainly due to gains recognized in 2012 from previous investments and lower returns on alternative investments in the current quarter. AIG is actively managing its businesses, including the ongoing pursuit of monetizing its interest in International Lease Finance Corporation (ILFC). The company also reported progress in streamlining its legal entity structure and managing its investment portfolio to enhance yields while maintaining credit quality. Despite ongoing market challenges such as low interest rates, AIG's strategic initiatives and operational efficiencies are yielding positive results, particularly in its core insurance operations.

Financial Highlights

29 data points
Beta

Revenue

$15.94B

Net Income

$2.17B

13.6% Net Margin

EPS (Diluted)

$1.46

Total Assets

$540.74B

Cash & Equivalents

$2.06B

Free Cash Flow

$2.27B

Financial Statements
Beta
Revenue$15.94B
SG&A Expenses$2.25B
Operating Income$7.03B
Interest Expense$516.00M
Net Income$2.17B
EPS (Basic)$1.47
EPS (Diluted)$1.46
Shares Outstanding (Basic)1.48B
Shares Outstanding (Diluted)1.49B

Key Highlights

  • 1Net income attributable to AIG increased by 17% to $2.17 billion in Q3 2013 compared to Q3 2012.
  • 2AIG Property Casualty's pre-tax operating income increased by 33% to $1.04 billion, driven by improved underwriting results and lower catastrophe losses.
  • 3AIG Life and Retirement's pre-tax operating income rose by 38% to $1.14 billion, benefiting from higher fee income and effective spread management.
  • 4The company reduced total debt by $7.6 billion in the first nine months of 2013 through maturities, repayments, and repurchases.
  • 5AIG repurchased approximately 4 million shares of common stock for $192 million in Q3 2013 under a new $1.0 billion authorization.
  • 6Net investment income for AIG Property Casualty decreased by 4% in Q3 2013 year-over-year due to lower returns on alternative investments.
  • 7Discontinued operations resulted in a net loss of $42 million for Q3 2013, primarily due to a loss on the sale of ILFC.

Frequently Asked Questions

AIG reported a net income attributable to AIG of $2.17 billion in the third quarter of 2013, an increase of 17% compared to $1.86 billion in the third quarter of 2012. This improvement was driven by stronger performance in its insurance segments, particularly AIG Property Casualty and AIG Life and Retirement.

AIG Property Casualty saw a significant increase in pre-tax operating income due to improved underwriting results and lower catastrophe losses. AIG Life and Retirement also reported substantial growth in pre-tax operating income, benefiting from higher fee income and effective spread management. Other Operations, however, reported a pre-tax loss, largely due to a decline in income from Global Capital Markets and Direct Investment Book, and a loss on extinguishment of debt.

During the third quarter of 2013, AIG paid a cash dividend of $0.10 per share. The company also announced a new $1.0 billion share repurchase program and repurchased approximately 4 million shares for $192 million. Additionally, AIG continued its debt reduction efforts, repaying $7.6 billion of debt in the first nine months of the year.

Net investment income decreased by 4% in the third quarter of 2013 compared to the prior year, primarily due to lower returns on alternative investments and the impact of reinvesting proceeds from asset sales and maturities at lower interest rates. However, net investment income increased by 7% for the first nine months of 2013, largely due to stronger performance in alternative investments.