American International Group Inc. (AIG) - Get American International Group Inc. Report shares were indicated sharply higher Tuesday after the insurance group posted stronger-than-expected first quarter earnings and forecast underwriting profits for the full year.
AIG said adjusted profits for the three months ending in March rose 52% from the same period last year to $1.58 per share, well ahead of the Street consensus forecast of $1.06. Underwriting income profit for AIG's flagship general insurance division was pegged at $179 million, a big swing from last year's $251 million loss, while investment income hit $1.1 billion. Gross written premiums rose 11% to $10.195 billion, the company said, while its combined ratio, a key metric for industry profitability, improve by 360 basis points to 96.1%.
"Our first quarter results represented strong performance, particularly in General Insurance, reflecting significant foundational work throughout 2018 to position AIG for sustainable, profitable growth. General Insurance achieved an underwriting profit driven by underwriting and expense discipline, improved business mix and reinsurance actions," said CEO Brian Duperreault. "We achieved an underwriting profit on a calendar year and accident year basis in the first quarter and we expect that to continue for the full year."
"Life and Retirement delivered solid performance, benefiting from diversification of product and distribution channels," he added. "We expect Life and Retirement to continue to deliver a low to-mid teens adjusted ROCE, and we expect to reach a double-digit adjusted ROCE for consolidated AIG within three years."
AIG shares were marked 7.2% higher in pre-market trading Tuesday, indicating an opening bell price of $50.50 each, a move that would extend the stock's year-to-date gain to around $50.50 each.
The group will hold its investor conference call at 8:00 am Eastern time.