Monday 5 December 2016

AIG first quarter earnings down slightly on interest rates, returns

Published 01/05/2015 | 07:45

Insurer AIG has slashed top executives' salaries to comply with pay restrictions
Insurer AIG has slashed top executives' salaries to comply with pay restrictions

American International Group Inc's (AIG.N) first-quarter earnings fell slightly as low interest rates and weaker returns from alternative investments offset improvements in its commercial insurance business.

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The U.S. insurer also said on Thursday that it authorized the buyback of up to $3.5 billion in additional shares.

AIG's posted operating earnings of $1.69 billion, or $1.22 per share, in the quarter. That was down around 3 percent from a year earlier, when it had operating earnings of $1.74 billion, or $1.18 a share.

Analysts, on average, had expected earnings of $1.19 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear whether the analyst estimate was directly comparable to operating earnings.

The company's net income rose more than 50 percent to $2.47 billion, bolstered by one-time gains from the sale of two of its large shareholdings.

AIG has focused more closely on its core businesses after bad bets on derivatives nearly sank the company - the largest commercial insurer in the United States and Canada - during the financial crisis.

"Our diversified business model and balance sheet deleveraging highlight how we have reduced our overall risk level," AIG Chief Executive Peter Hancock said in a statement.

As interest rates have remained very low, bond investors - including insurers - have struggled to achieve adequate returns. AIG's net investment income fell in all the company's business segments.

In AIG's commercial insurance segment, operating income rose to $1.46 billion from $1.42 billion as underwriting results improved, operating income at its consumer insurance operations fell around 19 percent to $945 million.


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