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How AIG’s Consumer Insurance Division Performed in 3Q17

Raymond Anderson - Author
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Nov. 14 2017, Updated 7:32 a.m. ET

Marginal fall

American International Group’s (AIG) consumer insurance division’s total operating revenue fell 1% from $6 billion in 3Q16 to $5.9 billion in 3Q17. The marginal fall was mainly due to lower net investment income and premiums.

The division’s premiums fell 2% to $3.2 billion in 3Q17 from $3.3 billion in 3Q16. Whereas AIG has a beta of 1.3, peers (XLF) National General Holdings (NGHC), Arch Capital Group (ACGL), and Allstate (ALL) have betas of 1.1, 0.46, and 0.97, respectively.

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Net investment income and total operating expenses

AIG’s consumer insurance division saw net investment income of $1.8 billion in 3Q17, compared with $1.9 billion in 3Q16, a 3% fall. The division’s total operating expenses rose 3% from $4.8 billion in 3Q16 to $4.9 billion in 3Q17, mainly due to higher interest expenses.

In 3Q17, its interest expenses stood at $32 million, compared with $23 million in 3Q16, reflecting a substantial 39% rise. The division’s general operating and other expenses rose 3% to $1.20 billion in 3Q17 from $1.18 billion in 3Q16.

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