Summary
American International Group, Inc. (AIG) reported a mixed financial performance for the quarter and nine months ended September 30, 2016. Total revenues remained relatively stable year-over-year for the quarter, but declined for the nine-month period. Net income attributable to AIG saw a significant rebound in the quarter, moving from a net loss of $231 million in the prior year to a net income of $462 million, driven by improvements in insurance operations and higher investment income. However, for the nine-month period, net income attributable to AIG decreased to $2.2 billion from $4.0 billion in the prior year, impacted by lower investment income, an underwriting loss in Commercial Insurance, and increased net realized capital losses. The company continued its strategic divestiture program, entering into agreements to sell United Guaranty and Ascot, and completing the sale of NSM Insurance Group. These actions are part of AIG's ongoing effort to streamline operations and focus on more profitable segments. Commercial Insurance faced challenges with increased catastrophe losses and adverse prior year development, leading to an underwriting loss for the quarter and year-to-date. Consumer Insurance, however, showed improved pre-tax operating income, particularly in Retirement and Life segments, driven by favorable actuarial assumption updates and investment performance. Corporate and Other reported a higher operating loss, largely due to a significant loss recognition expense in Institutional Markets related to payout annuities. The company's investment portfolio saw an increase in net unrealized gains due to declining interest rates and narrowing credit spreads. AIG also continued its capital return initiatives, repurchasing a substantial amount of its common stock and paying dividends.
Financial Highlights
35 data points| Revenue | $12.85B |
| SG&A Expenses | $2.54B |
| Operating Income | $2.25B |
| Interest Expense | $329.00M |
| Net Income | $462.00M |
| EPS (Basic) | $0.43 |
| EPS (Diluted) | $0.42 |
| Shares Outstanding (Basic) | 1.07B |
| Shares Outstanding (Diluted) | 1.10B |
Key Highlights
- 1Net income attributable to AIG rebounded to $462 million in Q3 2016, compared to a net loss of $231 million in Q3 2015.
- 2Pre-tax operating income for Consumer Insurance increased significantly by 111% for the quarter and 25% year-to-date, driven by favorable actuarial assumption updates and investment performance.
- 3Commercial Insurance reported an underwriting loss for the quarter and year-to-date, impacted by higher catastrophe losses and adverse prior year loss reserve development.
- 4AIG announced significant divestiture agreements, including the sale of United Guaranty for $3.4 billion and Ascot for $1.1 billion.
- 5The company repurchased approximately $8.5 billion of common stock and $263 million of warrants during the first nine months of 2016.
- 6Net investment income increased by 18% for the quarter, driven by higher returns on alternative investments and favorable fair value option adjustments, but decreased by 4% year-to-date due to lower alternative investment income and reinvestment yields.
- 7Corporate and Other reported a higher pre-tax operating loss of $522 million for the quarter and $1.4 billion year-to-date, significantly impacted by loss recognition expense in Institutional Markets.