10-QPeriod: Q2 FY2020

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 4, 2020For Securities:AIG

Summary

American International Group, Inc. (AIG) reported a net loss attributable to common shareholders of $(7.9) billion, or $(9.15) per diluted share, for the second quarter of 2020. This significant loss was primarily driven by an $8.4 billion loss related to the closing of the Majority Interest Fortitude Sale. The company also experienced net realized capital losses of $(2.3) billion compared to capital gains in the prior year, lower investment returns, and higher catastrophe losses and adverse mortality due to the impact of COVID-19. Despite the quarterly loss, AIG's financial position showed an increase in total assets to $569.4 billion from $525.1 billion at the end of 2019, and total AIG shareholders' equity stood at $62.2 billion. The company also maintained a liquidity position with $15.2 billion in liquidity sources as of June 30, 2020. AIG continued its strategic focus on underwriting excellence and portfolio optimization across its General Insurance and Life and Retirement segments, with efforts to drive profitable growth and manage expenses despite challenging market conditions exacerbated by the pandemic.

Financial Highlights

34 data points
Beta

Revenue

$9.40B

Net Income

-$7.93B

-84.4% Net Margin

EPS (Diluted)

$-9.15

Total Assets

$569.39B

Cash & Equivalents

$3.41B

Free Cash Flow

$347.00M

Financial Statements
Beta
Revenue$9.40B
SG&A Expenses$2.09B
Operating Income-$6.19B
Interest Expense$365.00M
Net Income-$7.93B
EPS (Basic)$-9.15
EPS (Diluted)$-9.15
Shares Outstanding (Basic)866.97M
Shares Outstanding (Diluted)866.97M

Key Highlights

  • 1Net loss attributable to common shareholders of $(7.9) billion ($9.15) per diluted share for Q2 2020.
  • 2Significant loss driven by an $8.4 billion loss from the Majority Interest Fortitude Sale.
  • 3Net realized capital losses of $(2.3) billion in Q2 2020, a reversal from capital gains in Q2 2019.
  • 4Total assets increased to $569.4 billion, while total shareholders' equity was $62.2 billion.
  • 5Liquidity sources remained strong at $15.2 billion as of June 30, 2020.
  • 6General Insurance net premiums earned decreased by 14% year-over-year, impacted by COVID-19 and reinsurance agreements.
  • 7Life and Retirement adjusted pre-tax income decreased by 16% year-over-year, affected by lower investment income and higher expenses.

Frequently Asked Questions

The primary driver of the net loss was an $8.4 billion loss related to the closing of the Majority Interest Fortitude Sale. This was compounded by net realized capital losses, lower investment returns, and increased catastrophe losses and adverse mortality due to the impact of COVID-19.

AIG experienced lower investment returns in Q2 2020, including losses on private equity funds and fair value option equity securities due to market declines. Net investment income decreased by 10% year-over-year for the quarter. However, net unrealized gains on available-for-sale securities increased to approximately $21.4 billion due to lower interest rates being partially offset by widening credit spreads.

COVID-19 had a significant adverse impact across AIG's operations. It led to increased catastrophe losses and adverse mortality, particularly affecting the General Insurance segment. In Life and Retirement, it impacted premiums and deposits, investment returns, and led to higher variable annuity DAC/SIA amortization and reserves due to equity market performance. The company is continuously assessing the evolving impact of the pandemic.

Yes, AIG paid cash dividends on both its Common Stock ($0.32 per share) and Series A Preferred Stock ($365.625 per share). The company also repurchased approximately 12 million shares of AIG Common Stock for $500 million under an accelerated stock repurchase agreement.