American International Group Inc (AIG) Beats Earnings Expectations

American International Group Inc (AIG) Beats Earnings Expectations
By American International GroupSVG version by JBarta ( [Public domain], via Wikimedia Commons

American International Group Inc (NYSE:AIG) released its fourth quarter earnings report after closing bell, posting net income of $2 billion or $1.34 per share and beating expectations, which were for 96 cents per share. After-tax operating income was $1.7 billion or $1.15 per share for the quarter which ended in December.

Breaking down AIG’s results

The company’s book value per share rose 3% year over year. In the insurer’s property casualty division, the company reported growth in pretax operating income because of better underwriting results and higher net investment income. In its commercial insurance underwriting business, the company improved its ratio 22.6 points, bringing it to 107.7 because of lower catastrophe losses. In consumer insurance underwriting, the company’s combined ratio fell 7.9 points to 103.3 because of lower catastrophe losses.

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“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,” said President and CEO Robert Benmosche in a statement. “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.”

AIG announces capital management changes

American International Group Inc (NYSE:AIG) said they also decided to raise their quarterly dividend 25% and authorize an additional $1 billion in share repurchases. The higher dividend will now be 12.5 cents per share.

Last month, American International Group Inc (NYSE:AIG) reduced its DIB debt by $2.2 billion by redeeming $1.2 billion aggregate principal amount of the 4.25% notes due this year and buying back $1 billion of its 8.25% notes due 2018. During the fourth quarter, the insurer issued $1 billion of 4.125% senior notes due 2024 and bought back $1.1 billion of debt with an average coupon of more than 7.5%.

The insurer also announced an agreement to sell International Lease Finance Corporation to AerCap Holdings N.V. for about $5.4 billion.

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