American International Group (AIG) deploys its capital on new initiatives, technology upgrades, and expansion of product lines to increase its presence globally.
In 2016, the company will make select investments in technology and innovation, and it will also return capital to its shareholders. The company rewards shareholders through dividends and stock repurchases.
AIG declared its quarterly dividend of $0.32 per share, translating into an annualized dividend yield of 2.4%. Its dividend yield has remained on par with other players in the Financial Select Sector SPDR ETF (XLF).
Other insurers have also repurchased their shares and returned capital to shareholders. Chubb (CB) has a dividend yield of 2.3%, Allstate (ALL) has a yield of 2.0%, and MetLife (MET) has a yield of 3.6%.
In the second quarter of 2016, AIG repurchased approximately 50.1 million shares, or 5% of total outstanding shares, for an aggregate purchase price of $2.8 billion. The company made additional repurchases of approximately $698 million through the end of August 2, 2016.
AIG authorized the repurchase of additional shares of AIG common stock with an aggregate purchase price of up to $3.0 billion, which increased AIG’s remaining share repurchase authorization on such a date to approximately $4.0 billion. AIG aims to return at least $25 billion to shareholders by 2017.
AIG appears to be optimistic about capital flows in the Life Insurance business as well as the improved risk profile of the Property and Casualty business. However, it’s facing a huge dent from returns in alternative investments.