American International Group Inc (AIG) Posts Weak Q3; Stock Falls After-Hours

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The stock price of American International Group declined almost 2% to $62.68 per share during the extended trading on Monday.  The company reported weak financial results for the third quarter.

AIG third-quarter financial results

AIG reported an after-tax operating profit of $691 million or $0.52 per share for the third quarter, lower than its $1.72 billion profit or $1.19 per share during the same period a year ago.

According to insurance giant, on reported basis, its net loss was $231 million or $0.18 per share during the period.

AOG said its quarterly operating results declined due to lower income on hedge fund investments and lower income on assets marked to fair value through earnings including a portion of the company’s holdings in the shares of People’s Insurance Company (Group) China Limited (PICC Group), PICC Property & Casualty Company Limited (PICC P&C).

AIG is making progress in its transformation efforts

AIG said its general, operating expenses (GOE) dropped 6% during the first nine months of 2015. The company’s book value per share excluding AOCI and DTA climbed 7% tp $61.9.

AIG said its normalized ROE excluding AOCI and DTA increased 5.9% during the quarter.

In a statement, AIG President and CEO Peter D. Hancock said, “This quarter’s results, while falling short of expectations due to market volatility, show signs that we are making progress to transform AIG for long-term competitiveness.”

He added, “Our strategy focuses on four major objectives: to narrow our focus on businesses where we can grow profitably, drive for efficiency, grow through innovation and optimizing our data assets, and return excess capital.”

During the quarter, the insurance giant repurchased approximately 61 million shares worth around $3.7 billion. The insurance giant repurchased additional $602 million worth of share by the end of October.

AIG restructuring

According to AIG, its restructuring initiatives is expected to result in pre-tax restructuring and other costs of approximately $0.5 billion for organizational simplification, operational efficiency, and business rationalization.

The company also estimated to generate around $0.4 billion to $0.5 billion in annualized savings following the full implementation of the restructuring initiatives.

AIG’s third-quarter financial results included approximately $274 million in pre-tax restructuring and other costs.

“This quarter’s restructuring actions mark the latest significant, visible steps in our transformation toward becoming more efficient, less complex, and able to respond to our clients’ needs with greater agility,” said Hancock.

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