10-QPeriod: Q3 FY2020

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:AIG

Summary

American International Group, Inc. (AIG) reported a net income attributable to common shareholders of $281 million, or $0.32 per diluted share, for the third quarter of 2020. This represents a significant decrease from $648 million, or $0.74 per diluted share, in the prior year's third quarter. The decline was primarily driven by net realized capital losses, particularly from derivative activities and the Fortitude Re funds withheld assets, which contrasted with net realized capital gains in the prior year. Additionally, AIG experienced higher catastrophe losses, including impacts from COVID-19 and weather-related events. Despite the decrease in net income, AIG's Adjusted Pre-Tax Income (a non-GAAP measure) increased by 51% to $975 million for the Life and Retirement segment, driven by higher investment returns and improved underwriting discipline in General Insurance. However, the nine-month year-to-date comparison showed a net loss attributable to common shareholders of $5.9 billion, compared to a net income of $2.4 billion in the prior year, largely due to the loss incurred from the sale of Fortitude Holdings, lower investment returns overall, and increased mortality and catastrophe losses. The company also announced its intention to separate its Life and Retirement business, a strategic move that will reshape its future operations.

Financial Highlights

35 data points
Beta

Revenue

$10.22B

Net Income

$288.00M

2.8% Net Margin

EPS (Diluted)

$0.32

Total Assets

$577.23B

Cash & Equivalents

$3.19B

Free Cash Flow

$848.00M

Financial Statements
Beta
Revenue$10.22B
SG&A Expenses$1.99B
Operating Income-$5.92B
Interest Expense$379.00M
Net Income$288.00M
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)867.71M
Shares Outstanding (Diluted)873.13M

Key Highlights

  • 1Net income attributable to common shareholders declined to $281 million ($0.32/diluted share) from $648 million ($0.74/diluted share) in Q3 2019.
  • 2The quarter was impacted by net realized capital losses, primarily from derivatives and Fortitude Re funds withheld assets, contrasting with net realized capital gains in Q3 2019.
  • 3Catastrophe losses, including COVID-19 impacts, were higher compared to the prior year's third quarter.
  • 4Life and Retirement segment's Adjusted Pre-Tax Income increased by 51% year-over-year to $975 million, driven by improved investment income and actuarial assumption updates.
  • 5General Insurance segment saw a decrease in Adjusted Pre-Tax Income, primarily due to higher catastrophe losses and prior year development, partially offset by improved underwriting results.
  • 6AIG announced its intention to separate its Life and Retirement business, a significant strategic development.
  • 7Total assets increased to $577.23 billion as of September 30, 2020, from $525.06 billion as of December 31, 2019.

Frequently Asked Questions

For the third quarter of 2020, AIG reported a net income attributable to common shareholders of $281 million, or $0.32 per diluted share. This is a decrease compared to the $648 million, or $0.74 per diluted share, reported for the third quarter of 2019.

The decline in net income was primarily due to net realized capital losses, particularly from derivative activities and the Fortitude Re funds withheld assets, which contrasted with net realized capital gains in the prior year. Higher catastrophe losses, including those related to COVID-19 and weather events, also contributed to the decrease.

The announced intention to separate the Life and Retirement business is a major strategic development for AIG. While no specific structure or timeline has been detailed, this move signals a significant shift in the company's focus, potentially streamlining operations and allowing for more targeted strategies within the remaining General Insurance and other businesses.

AIG's investment portfolio saw mixed performance. Net investment income increased by 12% to $3.8 billion for the quarter, driven by higher gains on alternative investments and fair value option equities. However, for the nine-month period, net investment income decreased due to market volatility affecting alternative investments and widening credit spreads on fixed maturity securities.