10-QPeriod: Q2 FY2016

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 2, 2016For Securities:AIG

Summary

American International Group, Inc. (AIG) reported mixed results for the second quarter of 2016. While the company saw an increase in net income attributable to AIG shareholders, driven by higher net realized capital gains and lower extinguishment of debt charges, the overall operating performance saw a decline. Commercial Insurance experienced a significant decrease in pre-tax operating income, largely due to underwriting losses in Property Casualty, impacted by higher catastrophe losses and a net loss reserve discount charge. Consumer Insurance, however, showed an increase in pre-tax operating income, boosted by improved underwriting results in Personal Insurance and more favorable mortality in Life, though lower investment income from alternative investments presented a challenge. The company continued its strategic focus on improving operational efficiency and returning capital to shareholders, demonstrated by significant share repurchases during the period. Investors should note the ongoing impact of low interest rates and currency volatility on the business.

Financial Highlights

35 data points
Beta

Revenue

$14.72B

Net Income

$1.91B

13.0% Net Margin

EPS (Diluted)

$1.68

Total Assets

$510.35B

Cash & Equivalents

$1.78B

Free Cash Flow

$1.54B

Financial Statements
Beta
Revenue$14.72B
SG&A Expenses$2.59B
Operating Income$1.79B
Interest Expense$320.00M
Net Income$1.91B
EPS (Basic)$1.72
EPS (Diluted)$1.68
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Net income attributable to AIG shareholders increased to $1.91 billion in Q2 2016 from $1.80 billion in Q2 2015, driven by higher net realized capital gains.
  • 2After-tax operating income attributable to AIG decreased to $1.11 billion in Q2 2016 from $1.89 billion in Q2 2015.
  • 3Commercial Insurance pre-tax operating income decreased by 27% to $1.09 billion, primarily due to underwriting losses in Property Casualty.
  • 4Consumer Insurance pre-tax operating income increased by 8% to $1.10 billion, driven by improved underwriting results in Personal Insurance and favorable mortality in Life.
  • 5The company repurchased approximately 113 million shares of common stock for $6.2 billion in the first half of 2016.
  • 6Total AIG shareholders' equity increased to $89.95 billion as of June 30, 2016, from $89.66 billion as of December 31, 2015.

Frequently Asked Questions

Net income attributable to AIG shareholders was $1.91 billion for the second quarter of 2016, an increase from $1.80 billion in the second quarter of 2015.

Commercial Insurance's pre-tax operating income decreased by 27% to $1.09 billion, primarily due to underwriting losses in Property Casualty, which was impacted by higher catastrophe losses and a net loss reserve discount charge.

AIG continued its share repurchase program, repurchasing approximately 113 million shares of common stock for $6.2 billion in the first half of 2016. The Board of Directors also increased the share repurchase authorization.

The low interest rate environment negatively affects sales of interest rate-sensitive products and can reduce profitability on existing business due to lower reinvestment yields. AIG is employing strategies like disciplined pricing and managing crediting rates to mitigate these pressures.