Tags: AIG | profit | claims | costs

AIG Profit Falls as Claims Costs Climb

Monday, 05 May 2014 04:58 PM

American International Group Inc., the largest commercial insurer in the U.S. and Canada, said first-quarter profit fell 27 percent as claims costs climbed at the property-casualty business.

Net income declined to $1.61 billion, or $1.09 a share, from $2.21 billion, or $1.49, a year earlier, New York-based AIG said Monday in a statement. Operating profit, which excludes some investing results, was $1.21 a share, beating the $1.07 average estimate from 24 analysts surveyed by Bloomberg.

Chief Executive Officer Robert Benmosche, 69, is shifting the business mix and cutting jobs as he works to improve results at the property-casualty unit. The CEO has used dividends and repurchases to reward shareholders who’ve helped recapitalize AIG as the company emerged from the U.S. rescue that it repaid at the end of 2012.

“It’s a question of, ‘Can they get back to where they were, the top-tier underwriter?’” Cathy Seifert, an analyst at Standard & Poor’s Capital IQ, said by phone before results were announced. “They basically need to boost margins in the P&C business. They need to show top-line growth.”

AIG fell 1.9 percent to $51.70 in extended trading at 5 p.m. in New York, after rising 0.7 percent during the regular session. The stock has advanced 18 percent in the past 12 months through the close of regular trading, beating the 17 percent gain of the Standard & Poor’s 500 Index.

Winter weather in the U.S. contributed to an increase in first-quarter claims at some property insurers. Burst pipes, roof collapses and slick roads contributed to $2.6 billion in insured losses industrywide from the winter weather through March, insurance broker Aon Plc said in a report last month.

Underwriting Loss

Operating profit fell 26 percent to $1.16 billion at the property-casualty business, which is overseen by Peter Hancock. The unit, which insures commercial property, corporate boards and airplanes, posted a 1.2 percent decrease in sales to $8.33 billion

AIG paid out $1.01 in claims and expenses for every premium dollar it took in during the first quarter, compared with 97.3 cents a year earlier. The underwriting loss was $97 million.

AIG hasn’t posted an underwriting profit at the property- casualty operation since the first quarter of last year. Benmosche announced a plan in February to cut AIG’s staffing by about 3 percent and has been moving workers to lower-cost locations such as Amarillo, Texas.

Life Insurance

The insurer got more than half its profit last year from the life and retirement unit, which offers annuities, mutual funds and insurance in the U.S. AIG has been expanding sales of the retirement products as rivals such as MetLife Inc. scaled back. The unit, led by Jay Wintrob, has also benefited from a stock-market rally.

Book value, a measure of assets minus liabilities, rose to $71.77 per share as of March 31 from $68.62 three months earlier. The insurer said it repurchased $867 million of its stock in the quarter.

AIG lifted its quarterly dividend in February by 25 percent to 12.5 cents a share and authorized $1 billion in buybacks. In November, Benmosche said AIG would stop providing updates on progress toward the company’s so-called aspirational goals for 2015, such as achieving a 10 percent return on equity.

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
Companies
American International Group Inc., the largest commercial insurer in the U.S. and Canada, said first-quarter profit fell 27 percent as claims costs climbed at the property-casualty business.
AIG, profit, claims, costs
534
2014-58-05
Monday, 05 May 2014 04:58 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved