American International Group, Inc. AIG reported fourth-quarter 2024 adjusted earnings per share of $1.30, which beat the Zacks Consensus Estimate by 3.2%. The bottom line improved 1.6% year over year.
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Adjusted operating revenues amounted to $6.85 billion, which declined significantly year over year. However, the top line beat the consensus mark by 1.3%.
The better-than-expected fourth-quarter results were supported by new business production, robust retention and lower expenses. Lower premiums and high catastrophe charges partially offset the positives.
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote
AIG’s Quarterly Operational Update
Premiums of $6 billion declined 1% year over year in the quarter but beat the Zacks Consensus Estimate by 0.8%. Total net investment income increased 44.4% year over year to $1.3 billion, attributable to increased income from alternative investments, lower investment expenses and dividends received from Corebridge Financial, Inc. CRBG. The metric beat the consensus mark by 50%. The company now has a 22.7% ownership interest in Corebridge.
Total benefits, losses and expenses fell 6.9% year over year to $5.6 billion. The year-over-year decline was due to lower general operating and other expenses and net gain on divestitures and other, partially offset by higher losses and loss adjustment expenses and amortization of deferred policy acquisition costs.
Adjusted return on equity of AIG was 7.2%, which improved 70 basis points (bps) year over year.
Segmental Performances of AIG
General Insurance – North America Commercial
The segment recorded net premiums written of $2.2 billion, which rose 5% year over year on a reported basis and rose 9% on a comparable basis. The metric benefited from new business production in Casualty and Lexington Insurance, improving rate trends and robust retention in the fourth quarter.
Underwriting income of $25 million declined 92% on a reported basis. The metric was affected by increased catastrophe charges, which rose more than eightfold year over year to $301 million. The combined ratio of 98.8% deteriorated 1,370 bps year over year.
General Insurance – International Commercial
The segment recorded net premiums written of $2.1 billion, which rose 9% year over year on a reported basis and rose 7% on a comparable basis. The metric benefited from new business production and robust retention in the fourth quarter in the Global Specialty and Property business.
Underwriting income of $347 million improved 19% on a reported basis. The metric benefited from lower losses and loss adjustment expenses. Catastrophe-related charges were $3 million in the fourth quarter. The combined ratio of 83.1% improved 240 bps year over year.
General Insurance – Global Personal
The segment recorded net premiums written of $1.8 billion, which rose 2% year over year on a reported basis and rose 5% on a comparable basis. The metric benefited from Auto and High Net Worth. However, this was partially offset by reduced Warranty production.
Underwriting income of $82 million improved nearly four-fold on a reported basis. Catastrophe-related charges were $21 million in the fourth quarter. The combined ratio of 95.4% improved 340 bps year over year.
Other Operations
Net investment income rose 32% year over year to $99 million in the fourth quarter due to a dividend income from Corebridge and improved income from the parent’s short-term investments.
Interest expenses declined 8% year over year due to a debt reduction. Adjusted pre-tax loss narrowed from $229 million to $150 million.
Financial Position of AIG (As of Dec. 31, 2024)
AIG exited the fourth quarter with a cash balance of $1.3 billion, which declined from $1.54 billion at 2023-end. Total assets of $161.3 billion declined from $539.31 billion at 2023-end.
Long-term debt amounted to $8.76 billion, which declined from $10.38 billion at 2023-end.
Total equity of $42.6 billion fell from $51.3 billion at 2023-end. Total debt to total capital was 17% at the fourth-quarter end, up from the 2023-end level of 16.8%.
Adjusted book value per share declined 6% year over year to $73.79.
AIG’s Capital Deployment Update
AIG rewarded its shareholders by repurchasing shares worth $1.8 billion and distributing dividends of $244 million.
Full-Year Update
American International’s 2024 total revenues of $27.3 billion decreased from $27.9 billion in 2023. However, adjusted earnings of $4.95 per share improved from $4.42 a year ago. Total benefits, losses and expenses decreased to $23.4 billion in 2024 from $25.1 billion in 2023.
Zacks Rank
AIG currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter 2024 results so far, the bottom-line results of W. R. Berkley Corporation WRB and The Travelers Companies, Inc. TRV beat the Zacks Consensus Estimate.
W.R. Berkley reported a fourth-quarter 2024 operating income of $1.13 per share, which beat the Zacks Consensus Estimate by 20.2%. The bottom line improved 17.7% year over year. Net premiums written were $2.9 billion, up 8% year over year. Operating revenues were $3.5 billion, up 9.2% year over year. The top line beat the consensus estimate by 4.2%. Net investment income grew 1.3% to $317.4 million.
Catastrophe losses of $79.6 million in the quarter were wider than the $32 million incurred in the year-ago quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 bps year over year to 90.2. Net premiums written in the Insurance segment increased 9.8% year over year to $2.6 billion. Net premiums written in the Reinsurance & Monoline Excess segment decreased 5.5% year over year to $316 million.
Travelers’ fourth-quarter 2024 core income of $9.15 per share beat the Zacks Consensus Estimate by 39.3% and improved 30.5% year over year. Total revenues increased 10.4% from the year-ago quarter to $11.9 billion. The top-line figure beat the Zacks Consensus Estimate by 1%. Net written premiums increased 7% year over year to a record $10.7 billion. Net investment income increased 26% year over year to $955 million.
Travelers witnessed an underwriting gain of $1.4 billion, up 30.5% year over year. The consolidated underlying combined ratio of 84 improved 190 bps year over year. Net written premiums in the Business Insurance unit increased 9% year over year to about $5.4 billion. The combined ratio improved 130 bps year over year to 85.2. Segment income of $1.2 billion increased 24.1% year over year. Bond & Specialty Insurance segment’s net written premiums increased 7% year over year to $1 billion. The combined ratio deteriorated 540 bps year over year to 82.7.
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