This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AIG Beats, Property Insurance Still Struggles

NEW YORK ( TheStreet) -- American International Group (AIG - Get Report) late on Thursday beat analysts' estimates for third-quarter earnings, but the company's property and casualty insurance unit continued to show underwriting losses.

AIG reported third-quarter after-tax operating income of $1.6 billion, or $1.00 a share, beating the consensus estimate of 86 cents, among analysts polled by Thomson Reuters. Earnings improved from an after-tax operating loss of $3.0 billion, or $1.58 a share, in the third quarter of 2011.

CEO Robert Benmosche said that "during the third quarter, our global property casualty operations benefited from improving pricing trends, continued implementation of strategic initiatives, and positive marks on recently acquired structured securities, while making strategic investments to increase efficiencies," and that "our domestic life and retirement operations delivered a solid quarter and also benefited from positive marks on higher yielding investments, as well as positive alternative investment returns."

Benmosche added that "mortgage Guaranty and Aircraft Leasing each posted profits, and have solidified their positions as leaders in their respective industries."

AIG's Property Casualty division continued to show an underwriting loss, with a combined ratio of 105.0 during the third quarter, improving from 105.9 a year earlier. The combined ratio is the sum of incurred losses and expenses divided by earned premiums. It measures underwriting profitability, and a combined ratio of over 100% indicates an underwriting loss.

The Property Casualty unit's third-quarter underwriting loss was $441 million, improving from $532 million in the third quarter of 2011. The unit's overall performance improved, with third-quarter pre-tax income of $949 million, compared to $551 a year earlier, as net investment income increased 20% year-over-year, to $1.2 billion.

Benmosche said that AIG had repurchased $13 billion in common shares year-to-date, as the government reduced its stake in the company. "During the quarter, we achieved the important milestone of making America whole on the $182 billion support provided to AIG during the crisis, plus a combined positive return to the American taxpayers of more than $15 billion to date."
Benmosche said "over the past week, our priorities have been to assist our customers affected by Hurricane Sandy and to safeguard our employees. It is too early to provide an estimate of the financial impact of the storm. At this time, AIG offices in lower Manhattan, including our corporate headquarters, are without power and our business continuity plans have enabled us to continue to serve our customers and operate nearly without interruption. I commend our employees in the path of the storm for their perseverance and commitment to AIG and our customers."

AIG's shares closed at $35.20 Thursday, returning 52% year-to-date. The shares trade for 10 times the consensus 2013 EPS estimate of $3.50.

The shares were down 1% in aftermarket trading, to $34.90.

AIG Chart AIG data by YCharts

Interested in more on American International Group? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AIG $58.28 0.00%
AAPL $110.78 0.00%
FB $94.01 0.00%
GOOG $641.47 0.00%
TSLA $246.15 0.00%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs