American International Group Inc

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American International Group Inc. (NYSE: AIG) is down about 3% following its Q2 2018 earnings release. Here’s what you need to know.

Berkshire Hathaway’s (BRK.B) Insurance segment saw subdued growth in the second half of 2017 on reinsurance losses.

Berkshire Hathaway’s (BRK.B) Insurance segment has seen a volatile performance in the recent quarters owing to reinsurance losses and rising claims.

In 1Q18, Berkshire Hathaway’s (BRK.B) insurance revenue fell YoY (year-over-year) to $14.6 billion from $22.9 billion.

Berkshire Hathaway announced its 1Q18 results on May 5. Buffett’s investment conglomerate posted a net loss of $1.1 billion, or $692 per share.

In American International Group’s (AIG) General Insurance segment, North American net premiums fell between 2016 and 2017, from $13.9 billion to $11.4 billion.

Prudential Financial’s (PRU) individual annuities segment’s adjusted operating income rose by $119 million to $541 million in 4Q17 from $422 million in 4Q16.

Among major conglomerates and managers (XLF), Berkshire Hathaway (BRK.B) has a next-12-month price target of $349,000.

In this series, we’ll look into Berkshire Hathaway’s 1Q18 expected divisional performance along with a variety of other factors.

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In March 2018, American International Group (AIG) is being tracked by 18 analysts, seven of whom have suggested “holds” on the stock.

On March 1, 2018, American International Group (AIG) announced that changes had been made to its leadership positions.

Emerging markets such as China provide a great growth opportunity for property and casualty insurers.

AIG’s Canadian business unit, AIG Canada, announced on February 13, 2018, that it had made the list of Canada’s Top 100 Employers of the younger generation.

Analysts assigned four “strong buy” or “buy” ratings out of six for Berkshire Hathaway in February 2018.

The Life Planner operations generated adjusted operating income of $1.49 billion in 2017 compared to $1.53 billion in 2016.

Of the 20 analysts that tracked AIG in January 2018, seven suggested a “strong buy,” and one rated the stock as a “sell.”

Analysts gave a one-year target of $67.93 on AIG stock, which reflects an increase of 14.3% from its current price of $59.43.

AIG’s International operations of its General Insurance segment posted an adjusted pretax loss of $399.0 million in 4Q17 compared to $441.0 million in 4Q16.

AIG’s Institutional Markets segment witnessed a marginal rise in its net investment income from $152.0 million in 4Q16 to $160.0 million in 4Q17.

AIG’s Life Insurance segment garnered premiums and deposits of $963.0 million in 4Q17 compared to $911.0 million in 4Q16.

AIG’s Group Retirement segment’s assets under administration (or AUA) stood at $103.8 billion on December 31, 2017.

In 4Q17, AIG’s pretax income stood at $474.0 million compared to $542.0 million in 4Q16.

AIG’s enterprise-value-to-sales ratio is ~1.6x on an LTM (last-12-months) basis.

On February 9, American International Group (AIG) posted earnings per share of $0.57 in 4Q17, which missed the analysts’ estimate by $0.18.

AIG (AIG) reported a net loss of $6.66 billion in 4Q17—compared to a loss of $3 billion in 4Q16.

Chubb’s (CB) net income in 4Q17 was $1.5 billion compared to $1.6 billion in 4Q16. It saw a rise in net premiums earned, from $7.1 billion in 4Q16 to $7.2 billion in 4Q17.

Chubb (CB) has reported 4Q17 EPS of $3.17, which exceeds analysts’ estimate by $0.88. The company’s core operating income in 4Q17 was $1.48 billion.

Despite the $32.9-billion hit the top five banks took in their fourth-quarter earnings, US banks (XLF) are generally very positive about the new tax plan.

Last week, US stocks closed the week on a very strong note mainly driven by strong earnings growth. All 11 sectors in SPY reported positive earnings growth.

Most countries tend to issue debt to fund their deficits and keep paying interest on these borrowings. These revenues are generated through taxes from companies and individuals.

Claims could subside The insurance sector (IYF) faced headwinds and losses in 3Q17 due to hurricanes across the US East Coast. Berkshire Hathaway (BRK.B), AIG (AIG), Prudential Financial (PRU), MetLife (MET), and other reinsurers faced headwinds and underwriting losses in 3Q17, which were partially offset by gains from debt and equity investments. In 4Q17, claims are […]

American International Group’s dividend per share rose 58% in 2016 and was flat in 2017.

Of 20 analysts tracking AIG, seven suggested a “strong buy,” nine recommended a “hold,” one suggested a “sell,” and three rated AIG stock as a “buy.”

On an NTM (next-12-months) basis, American International Group (AIG) has a price-to-earnings ratio of ~11.6x compared to its peers’ average of ~13.9x, which implies lower valuations.

In January 2018, Tom Bolt will become AIG’s chief underwriting officer. Bolt has more than 30 years of experience in the reinsurance and insurance industry.

AIG’s Life Insurance division generated other income of $34.0 million in 9M17 versus $43.0 million in 9M16, which implies a substantial 21.0% fall.

In 9M17 and 9M16, American International Group’s (AIG) Group Retirement business garnered $21.0 million in premiums, reflecting no change.

American International Group’s (AIG) Individual Retirement business posted pretax operating income of $1.8 billion in 9M17 versus $1.7 billion in 9M16, reflecting a rise of 5.0%.

American International Group’s (AIG) Liability and Financial Lines business saw a decline in net premiums earned to $6.5 billion in 9M17 from $8.1 billion in 9M16, reflecting a 20.0% fall.

Marginal fall MetLife’s (MET) operating earnings in the EMEA (Europe, the Middle East, and Africa) region fell from $74 million in 3Q16 to $71 million in 3Q17. Its total EMEA operating revenue fell from $702 million to $711 million, primarily due to higher premiums. In the EMEA region, MetLife’s premiums rose to $527 million from $500 million between 3Q16 […]

Berkshire Hathaway (BRK.B) reported losses before tax of $963 million in 3Q17 compared to earnings before taxes of $1.4 billion in the corresponding period last year.

Berkshire Hathaway (BRK.B) has missed estimates in six out of seven quarters mainly due to the weaker performance of the insurance sector.

Discounted valuation American International Group (AIG) has a one-year forward price-to-earnings ratio of 20.4x, whereas its peers’ average ratio is 21.0x. National General Holdings (NGHC), Allstate (ALL), and Arch Capital Group (ACGL) have ratios of 18.8x, 15.1x, and 29.2x, respectively. AIG’s lower valuation is mainly due its significant catastrophe losses of $3 billion in 3Q17 and its […]

Higher losses American International Group’s (AIG) personal insurance division saw catastrophe losses of $297 million in 3Q17, compared with $27 million in 3Q16. The substantial rise in losses was mainly due to windstorm and hailstorm losses, which stood at $206 million in 3Q17 and $26 million in 3Q16. Over the last 12 months, AIG has had a […]

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 […]

Net investment income and premiums American International Group’s (AIG) group retirement division saw its premiums fall marginally to $8 million in 3Q17 from $9 million in 3Q16. The division’s net investment income fell 5% from $554 million in 3Q16 to $524 million in 3Q17. This fall was mainly due to lower income from alternative investments. Whereas AIG […]

Assets under administration and premiums American International Group’s (AIG) individual retirement business saw its premiums fall 41% to $22 million in 3Q17 from $37 million in 3Q16. In 3Q17, the division’s assets under administration stood at $147.8 billion, due to positive equity markets and a favorable net flow related to index annuities. Whereas AIG has an enterprise value […]

Strong “buy” ratings Of the 19 analysts covering American International Group (AIG), two have recommended “sell,” six have recommended “hold,” seven have recommended “strong buy,” and four have recommended “buy.” Peer recommendations Of the 15 analysts covering Arch Capital Group (ACGL), one has recommended “strong sell,” eight have recommended “hold,” four have recommended “strong buy,” and two have recommended […]

Total operating revenue In 3Q17, American International Group’s (AIG) commercial insurance division’s total operating revenue comprised net investment income and premiums. In 3Q17, AIG’s commercial insurance division’s total operating revenue fell to $4.6 billion from $5.4 billion in 3Q16, a 15% fall. This fall was mainly due to premiums falling 15%, from $4.5 billion in 3Q16 […]

Total expenses rise American International Group’s (AIG) total benefits, losses, and expenses rose a substantial 20% from $12.1 billion in 3Q16 to $14.6 billion in 3Q17. This rise was mainly due to policyholder benefits and losses rising. In 3Q17, AIG incurred policyholder benefits and losses of $10.3 billion, compared with $7.5 billion in 3Q16, a […]

AIG’s revenue and earnings in 2015 and 2016 American International Group’s (AIG) revenue fell 9% and 10% in 2015 and 2016, respectively. Its US and Japanese revenue rose in 2015 before falling in 2016, and revenue from Europe and other regions fell in both years, along with revenue from premiums, policy fees, and other income. Its […]

Berkshire Hathaway Insurance segment is expected to see a YoY rise in revenues due to the sale of policies in automotive, property, and reinsurance offerings.

Chubb Limited (CB) reported net investment income of ~$1.5 billion in 1H17 compared to ~$1.4 billion in 1H16, reflecting a 9.6% increase. CB generated an 11% return on equity on a trailing-12-month basis.

According to Brian Duperreault, chief executive officer of American International Group (AIG), a company in any industry has to take the digitization path for long-term growth and success.

Brian Duperreault, chief executive officer of American International Group (AIG), has taken a major step by reshuffling the company into three units.

American International Group (AIG) is expected to announce its earnings for 3Q17 on November 2, 2017. Wall Street analysts have provided a high estimate of $0.90 for AIG’s 3Q17 EPS.

Berkshire Hathaway (BRK.B) saw subdued profits in its Insurance segment in 2Q17, mainly due to higher claims. The trend is set to get stronger in the second half of 2017

Chubb’s one-year forward PE ratio stands at 13.15x, compared with the peer average of 12.09x, which means that Chubb is trading at a premium valuation.

In 2017, MetLife (MET) is expected to declare a total dividend of $1.61 per share, representing an increase of 1.9% from the total dividend it declared in 2016.

US insurance giants (IYF) are expected to witness costs in the range of $20 billion–$65 billion stemming from the effects Hurricane Irma.

As of December 31, 2016, Chubb (CB) had total assets totaling $159.7 billion, compared with its total assets of $162.9 billion as of June 30, 2017.

Hurricane Harvey devastated Houston in late August 2017, causing damages totaling $180 billion, but Irma could be even more expensive.

From January 2016–June 2016, AIG managed to report total operating revenues of $10.8 billion—a 15% YoY fall, primarily due to lower premiums in 1H17.

In 1H17, Prudential Financial (PRU) generated total revenues of $27.1 billion—a year-over-year decline of ~5.8%.

Wall Street analysts have given a one-year price target of $157.53 on Chubb (CB), an increase of 11.4% from the current price level.

Chubb’s (CB) life insurance division has posted net premiums written of $523 million in 2Q17 as compared to $527 million in 2Q16.

Chubb’s (CB) Overseas General Insurance division saw a decline in its net premiums written in 2Q17 from $2.01 billion as compared to $2.03 billion in 2Q16.

Chubb’s (CB) global reinsurance division has witnessed a substantial fall in its net premiums written in 2Q17 as compared to 2Q16.

Chubb’s (CB) North America Agricultural Insurance division witnessed a rise of 7.7% in its net premiums written in 2Q17 as compared to 2Q16.

Chubb Limited (CB) has witnessed a rise of 2.0% in its net premiums written in 2Q17 as compared to 2Q16.

Chubb’s (CB) North America Commercial Property and Casualty Insurance division witnessed a marginal fall in its net premiums written in 2Q17 as compared to 2Q16.

Chubb (CB) reported earnings per share (or EPS) of $2.50 in 2Q17, which beat Wall Street analyst estimates of $2.47.

In 2Q17, Prudential Financial (PRU) reported 2Q17 net income of $491 million compared to $921 million in 2Q16. Its 2Q17 earnings per share of $2.09 missed the estimate of $2.70.

American International Group (AIG) is covered by 18 analysts, out of which seven analysts gave “strong buy” ratings on the stock.

Wall Street analysts have given a one-year price target of $70.00 on American International Group (AIG), which reflects an ~14.1% increase from the current price.

In 2Q16, AIG reported operating general operating expenses (or GOE) of $2.4 billion, which the company reduced by $191.0 million. It reported GOE of $2.2 billion in 2Q17.

AIG is expected to declare dividends of $1.33 per share in 2017, reflecting a rise of ~38.5% from the total dividends declared in 2016.

AIG’s pretax operating income for personal insurance stood at $330 million in 2Q17. In 2Q16, it stood at $152 million.

American International Group’s (AIG) Consumer Business division reported pretax operating income of ~$1.3 billion in 2Q17 compared to $948.0 million in 2Q16.

In 2Q17, the pretax operating income of AIG’s Commercial Business division stood at $716 million compared to $941 million in 2Q16.

AIG is expected to post earnings per share of $1.22 in 3Q17, an ~20.3% decline from its 2Q17 earnings. AIG is expected to report revenues of ~$11.8 billion in 3Q17.

The US debt-to-GDP ratio now stands at 106.1%, which means that the total US debt is more than the annual US GDP.

So far in August 2017, three of the seven analysts covering the company have rated it a “buy” or a “strong buy.”

The S&P 500 Index (SPY) recorded another lifetime high at 2,484.04 due to better-than-expected earnings in the first half of the previous week.

Berkshire Hathaway is expected to post EPS of $2,806 in 2Q17, which would reflect marginal growth on a year-over-year basis and strong growth sequentially.

In June 2017, 13 of the 19 analysts covering AIG rated AIG as a “buy” or a “strong buy.” Five analysts rated it as a “hold,” and one analyst gave it an “underperform” rating.

In 1Q17, AIG repurchased ~56.0 million shares, or 5.5% of its total outstanding shares, for a purchase price of ~$3.6 billion. The company made additional repurchases of ~$1.1 billion through May 3, 2017.

AIG’s Commercial division saw a loss ratio of 71.9 in 1Q17. AIG saw its book value expand ~2.5% in 1Q17 on a year-over-year basis.

Berkshire Hathaway’s (BRK.B) analyst ratings have remained stable over the past quarter on subdued earnings and analyst misses.

In 4Q16, American International Group (AIG) spent $206.0 million on restructuring initiatives that target inefficiencies and expense reduction.

Berkshire Hathaway’s (BRK-B) services and retailing division is expected to garner marginal growth in 4Q16, sequentially as well as YoY.

American International Group’s (AIG) stock has risen more than 14% and 31% over the past three and six months, respectively.

In 3Q16, AIG declared a quarterly dividend of $0.32 per share totaling $338 million, translating into an annualized dividend yield of 1.9%.

In this series, we’ll study AIG’s expected performance, investment profitability, operating divisions, expansion, balance sheet, dividends, and valuations.

Berkshire Hathaway (BRK-B) is expected to post EPS (earnings per share) of $2,829 per share in 4Q16 and $2,880 in 1Q17.

Closed-end funds have seen subdued originations over the past few quarters. Quality originations commanding higher yields continue to drive closed-end funds’ stock performances.