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AIG’s 2Q15 Earnings Top Estimates Driven by Investments

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Aug. 7 2015, Published 10:21 a.m. ET

Beating the estimates

American International Group (AIG) reported its 2Q15 earnings on August 3. Posting earnings per share (or EPS) of $1.39, the company beat Wall Street analysts’ EPS estimates of $1.22.

AIG posted 2Q15 after-tax operating income of $1.9 billion. The company reported net income of $1.8 billion, or $1.32 per diluted share, for 2Q15, compared to $3.1 billion, or $2.10 per diluted share, for the second quarter of 2014. The performance was mainly driven by investments in People’s Insurance Company, one of China’s biggest insurers, and earnings from aircraft leasing company AerCap (AER).

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Peter D. Hancock, AIG chairman and CEO, noted in an August 3 press release, “Our second quarter results demonstrate our steadfast commitment to value-based management—we’re taking action today to create long-term value for tomorrow. We continued to proactively manage our capital resources through both common stock and debt repurchases. We significantly reduced our non-core investments in both AerCap and Springleaf.”

Insurance giant

AIG is one of the largest insurers in the United States. AIG’s annual revenue is around $65 billion, and the company operates across the globe in multiple product lines.

The Americas remain the major contributor toward AIG’s top line, providing ~50% of property and casualty premiums, as well as 97% of its life insurance revenues. In the US, AIG’s competitors include ACE (ACE), Allstate (ALL), and Chubb (CB). Together these companies form 2.91% of the Financial Select Sector SPDR ETF (XLF).

AIG’s new leadership team, led by CEO Peter Hancock, took charge in September 2014 to integrate and position the company for improved and sustainable performance. Hancock has a strong track record in the financial services industry, and he served as the CEO of AIG’s property and casualty division before this role.

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