Analysts expect AIG to report earnings of $1.09 a share for the third quarter, and revenue of $8.57 billion.
The insurance firm recently agreed to pay New York state $35 million to settle claims that two of its former subsidiaries operated without licenses and misled regulators about their operations, according to the Associated Press. The company said it would drop its legal challenge to New York's probe as part of the settlement. The state agreed to pursue charges or a lawsuit against the company.
According to the Wall Street Journal, former AIG CEO Maurice Greenberg may be called to testify in a lawsuit against the U.S. government over the company's bailout. Greenberg's investment and charitable firm Starr International said the government overstepped its authority when it asked for a 79.9% equity stake in AIG when it provided the company with an $85 billion emergency loan.
TheStreet Ratings team rates AMERICAN INTERNATIONAL GROUP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN INTERNATIONAL GROUP (AIG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, notable return on equity, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMERICAN INTERNATIONAL GROUP has improved earnings per share by 13.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AMERICAN INTERNATIONAL GROUP increased its bottom line by earning $6.08 versus $4.27 in the prior year. For the next year, the market is expecting a contraction of 24.2% in earnings ($4.61 versus $6.08).
- The revenue fell significantly faster than the industry average of 20.5%. Since the same quarter one year prior, revenues fell by 10.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Insurance industry and the overall market, AMERICAN INTERNATIONAL GROUP's return on equity is below that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 12.5% when compared to the same quarter one year prior, going from $2,731.00 million to $3,073.00 million.
- You can view the full analysis from the report here: AIG Ratings Report