10-QPeriod: Q3 FY2015

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 2, 2015For Securities:AIG

Summary

For the quarter ended September 30, 2015, American International Group, Inc. (AIG) reported a net loss attributable to AIG of $231 million, or $(0.18) per diluted share, a significant decrease from the net income of $2,192 million, or $1.52 per diluted share, in the same period of the prior year. This decline was primarily driven by lower net investment income across all segments, particularly in alternative investments, and unfavorable adjustments in actuarial assumptions within the Consumer Insurance segment. Additionally, the company incurred substantial restructuring costs and experienced lower net realized capital gains compared to the prior year. Despite these headwinds, AIG continued its strategic focus on simplifying operations, improving technology, and enhancing customer value, while also actively managing its capital through share repurchanches and dividends. The Commercial Insurance segment saw a decline in pre-tax operating income due to lower net investment income and underwriting results, while Consumer Insurance also experienced a significant drop in pre-tax operating income attributed to reduced investment income and less favorable actuarial adjustments. The company's investment portfolio performance was impacted by lower hedge fund returns and lower reinvestment yields, contributing to the overall decrease in net investment income. AIG remains committed to its long-term strategic priorities of improving intrinsic value and sustainable profitability.

Financial Statements
Beta
Revenue$12.82B
SG&A Expenses$3.17B
Operating Income$4.04B
Interest Expense$321.00M
Net Income-$231.00M
EPS (Basic)$-0.18
EPS (Diluted)$-0.18
Shares Outstanding (Basic)1.28B
Shares Outstanding (Diluted)1.28B

Key Highlights

  • 1AIG reported a net loss of $231 million for the third quarter of 2015, compared to a net income of $2,192 million in the prior year's third quarter.
  • 2Diluted loss per share was $(0.18) for Q3 2015, versus diluted earnings per share of $1.52 in Q3 2014.
  • 3After-tax operating income attributable to AIG decreased to $691 million in Q3 2015 from $1,722 million in Q3 2014.
  • 4Total revenues decreased by 23% to $12,822 million in Q3 2015 from $16,697 million in Q3 2014.
  • 5Commercial Insurance pre-tax operating income declined by 34% to $815 million.
  • 6Consumer Insurance pre-tax operating income decreased by 48% to $657 million.
  • 7AIG repurchased approximately 129 million shares of common stock for $7.5 billion during the first nine months of 2015.
  • 8The company declared a quarterly dividend of $0.28 per share on September 28, 2015.

Frequently Asked Questions

In the third quarter of 2015, AIG reported a net loss attributable to AIG of $231 million, or $(0.18) per diluted share, a significant decrease from the net income of $2,192 million, or $1.52 per diluted share, in the same period of the prior year. This was primarily due to lower net investment income and unfavorable actuarial adjustments, along with restructuring costs.

Commercial Insurance's pre-tax operating income decreased by 34% to $815 million, driven by lower net investment income and underwriting results. Consumer Insurance's pre-tax operating income fell by 48% to $657 million, primarily due to reduced net investment income and less favorable actuarial assumptions.

Net investment income decreased significantly in the third quarter of 2015 compared to the prior year, mainly due to lower returns from alternative investments like hedge funds, and lower reinvestment yields. The company's available for sale investment portfolio saw a decrease in net unrealized gains due to widening credit spreads.

AIG continued its capital management activities by repurchasing approximately 129 million shares of common stock for $7.5 billion during the first nine months of 2015. The Board also authorized an additional $5.0 billion for share repurchases. The company also paid dividends on its common stock, including a $0.28 per share dividend in the third quarter.