American International Group Inc (AIG) Q1 Revenue Misses, Stock Falls

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American International Group Inc (NYSE:AIG) released its earnings numbers for the three months through March on Monday afternoon after the bell rang in New York. The company showed earnings per share of $1.21 ex-items for the quarter, which it records as its first of fiscal 2014. Revenue in the period totalled $8.23 billion. On Monday’s market shares in the insurance company trended up and finished the day at $52.72.

Analysts were expecting a difficult quarter to be apparent in the American International Group Inc (NYSE:AIG) report. In the run up to the release of the numbers a survey of 22 analysts by Businessweek found a consensus forecast of $1.07 per share for the first quarter. Revenue consensus estimates, according to the same outlets came in at $9.36 billion.

AIG still showing growth

In the first quarter of 2013 American International Group Inc (NYSE:AIG) has been facing pressure in the current economic climate. Though the company’s fourth quarter of 2013 was particularly positive, 2014 is not expected to deliver the same kinds of results. In the first quarter of last year the company managed to earn $1.34 per share on revenue of $8.6 billion.

One of the major constraints on American International Group Inc (NYSE:AIG) right now is afflicting almost everybody in the insurance business. Bond trading has been heartily impacted by the attitude of the Federal Reserve towards the current state of the economy and the expectations of traders. That leaves the 60% of its portfolio that sits in bonds less than generous to AIG shareholders.

As the Federal Reserve continues to change its policies, with the assumption that it is heading for an interest rate increase in the next year or two, the returns on bonds will get better. Yields have already increased since the central bank began to alter its outlook, and Janet Yellen took over the big chair from her predecessor.

Shareholders in American International Group Inc (NYSE:AIG) have been hit by the problems with yield at the insurance giant, but investors have still inflated the company’s value. The company’s stock grew by more than 47% in 2013, leaving it with a P/E of to 8.7 on Monday. The company is still undervalued compared to competitor Hartford Financial Services Group Inc (NYSE:HIG), though there is good reason for that.

AIG recovering, but still in shadow of 2008

This afternoon’s earnings report was another opportunity for management at American International Group Inc (NYSE:AIG) to show the recovery the company has managed in recent years. Despite that, the firm is still standing in the shadow of the events of 2008, and the government bailout that hanged the company completely. The value of American International Group Inc (NYSE:AIG) may never return to the highs directly before that massive crash.

Earnings for the full year 2014 at American International Group Inc (NYSE:AIG) are expected to come in a little below last year’s numbers, but the company’s revenue is expected to continue climbing. The insurance business is, however, a difficult one to predict, given the catastrophic problems it faces on a regular basis.

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