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AIG Reports Fourth Quarter 2013 Net Income Attributable To AIG Of $2.0 Billion And Diluted Earnings Per Share Of $1.34

Stocks in this article: AIG

“I am also pleased to announce the Board’s capital management decisions to increase AIG’s quarterly dividend by 25 percent and authorize the repurchase of up to an additional $1.0 billion worth of AIG Common Stock, both of which reaffirm the Board’s confidence in our strategy and allow us to return a portion of our success directly to our shareholders,” added Mr. Benmosche.

“Our profits illustrate the individual and combined earnings power of all three of our core insurance operations, as well as our ongoing commitment to capital management,” continued Mr. Benmosche. “With another year of solid performance under our belts, I am confident that we have positioned ourselves for strong growth and profitability in all of our operating businesses. Most importantly, this foundation will enable us to focus our energy on our customers.

“In addition, our fourth quarter severance charge represents another step in AIG’s continued transformation. We are increasingly a more agile, focused, and sustainable company. As we think about the long-term future of our company, we must be able to more efficiently meet and exceed the evolving expectations of our global customer base,” Mr. Benmosche concluded.

Capital and Liquidity

  • AIG shareholders’ equity totaled $100.5 billion at December 31, 2013
  • In the fourth quarter of 2013, issued $1.0 billion of 4.125% senior notes due 2024 and repurchased $1.1 billion of debt having an average coupon over 7.5%
  • In January 2014, AIG reduced DIB debt by $2.2 billion through a redemption of $1.2 billion aggregate principal amount of its 4.250% Notes due 2014 and a repurchase of $1.0 billion of its 8.25% Notes due 2018 using cash and short term investments allocated to the DIB
  • Repurchased 8.3 million shares of AIG Common Stock for an aggregate purchase price of approximately $405 million in the fourth quarter of 2013 (approximately $600 million for the full year 2013)
  • AIG Parent liquidity sources increased to $17.6 billion at year-end 2013, including $13.1 billion of cash, short-term investments, and unencumbered fixed maturity securities, from $16.1 billion at year-end 2012

AFTER-TAX OPERATING INCOME

   
     
Three Months Ended Full-Year Ended
December 31, December 31,
($ in millions)   2013   2012   2013   2012
Pre-tax operating income (loss)    
Insurance Operations
AIG Property Casualty $ 1,090 $ (944) $ 4,812 $ 1,793
AIG Life and Retirement 1,406 1,090 5,095 4,160
Mortgage Guaranty     48     (45)     205     9
Total Insurance Operations     2,544     101     10,112     5,962
Other Operations (excluding Mortgage Guaranty)
Direct Investment book 418 509 1,448 1,215
Global Capital Markets 194 300 625 557
Interest expense (328) (408) (1,412) (1,597)
Corporate expenses (213) (337) (1,009) (900)
Severance expense (265) - (265) -
Change in fair value of AIA (including realized gains in 2012) - 240 - 2,069
Change in fair value of ML III - - - 2,888
Other, Net     132     (4)     (103)     (94)
Total Other Operations (excluding Mortgage Guaranty) (62) 300 (716) 4,138
Consolidations, eliminations and other adjustments     41     (16)     165     (18)
Pre-tax operating income     2,523     385     9,561     10,082
Income tax expense (815) (87) (2,762) (3,187)
Noncontrolling interest – Treasury - - - (208)
Other noncontrolling interest     (4)     (8)     (37)     (52)
After-tax operating income attributable to AIG $ 1,704 $ 290 $ 6,762 $ 6,635
After-tax operating income per diluted common share     1.15     0.20     4.56     3.93

All operating segment comparisons that follow are to the fourth quarter 2012 unless otherwise noted.

AIG PROPERTY CASUALTY

 
 
Three Months Ended

December 31,

($ in millions)   2013     2012   Change  
Net premiums written $ 8,028  

$

7,809

  3 %
Net premiums earned 8,621 8,613 -
Underwriting loss (330) (2,161) 85
Net investment income     1,420     1,217   17
Pre-tax operating income (loss)   $ 1,090  

$

(944)

  NM %
Underwriting ratios:
Loss ratio 68.2 87.6 (19.4) pts
Acquisition ratio 19.5 20.2 (0.7)
General operating expense ratio     16.1     17.3   (1.2)
Combined ratio     103.8     125.1   (21.3)
Accident year loss ratio, as adjusted 66.4 63.3 3.1
Accident year combined ratio, as adjusted 102.0 100.8 1.2
Severe losses     3.2     0.7   2.5 pts

AIG Property Casualty’s growth in pre-tax operating income is attributable to an improvement in underwriting results and an increase in net investment income, partially offset by the impact of higher severe losses. As a result of AIG’s continued focus on capital management and legal entity simplification, AIG Property Casualty distributed $2.6 billion in cash dividends to AIG Parent during the fourth quarter of 2013, and a total of $4.1 billion for the full year of 2013.

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