American International Group Inc (AIG) Misses Earnings Estimates

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Shares of AIG edged downward by as much as 0.48% to $52.20 per share after tonight’s earnings report

American International Group released its latest earnings report after closing bell tonight, posting earnings of 97 cents per share, excluding items. Analysts had been expecting earnings of $1.05 per share for the fourth quarter.

Key metrics from AIG’s earnings report

Net earnings were 46 cents per share or $655 million, including after-tax losses related to extinguishment of debt. That’s compared to last year’s $1.34 per share or $2 billion in net income. Book value per share increased 13% year over year to $77.69.  Shareholders’ equity was $106.9 billion as of the end of December.

“Looking back on 2014, it was a year of transition and transformation, as we took important steps toward our goal of becoming the world’s most valued insurer,” said AIG President and CEO Peter Hancock in a statement. “Our focus on value benefits our customers and our shareholders, and leverages our global scale to achieve the right balance between growth, profitability, and risk. We began several value-based initiatives in 2014 and will continue these efforts in 2015.”

He added that they will start providing more details about expenses and investments starting in the current quarter. Additionally, he announced that they are changing the way they reports earnings. There are now two divisions: one for commercial and one for consumer.

AIG earnings by segment

AIG reported an increase in pre-tax operating income from its Commercial Insurance segment, which climbed from $973 million last year to $1.2 billion in the fourth quarter of 2014. Mortgage Guaranty income rose from $48 million last year to $171 million in the fourth quarter of 2014.

The firm reported a decline in Institutional Markets income to $118 million and a decline in Consumer Insurance income, which fell from $1.2 billion in the previous year’s quarter to $923 million in the fourth quarter of 2014. Retirement income fell from $957 million to $722 million, while Life income fell to $80 million. Income from Personal Insurance rose to $121 million.

AIG returns capital

The insurance provider bought back $1.5 billion worth of shares during the fourth quarter. AIG’s board also authorized up to $2.5 billion in additional share repurchases and declared a dividend of 12.5 cents per share.

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