We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AIG Q2 Earnings Miss Estimates on High Catastrophe Losses
Read MoreHide Full Article
American International Group, Inc. (AIG - Free Report) reported second-quarter 2024 adjusted earnings per share of $1.16, which missed the Zacks Consensus Estimate by 16.6%. However, the bottom line improved 9.4% year over year.
Operating revenues amounted to $6.6 billion, which declined 11.8% year over year. However, the top line significantly missed the consensus mark.
The weaker-than-expected results were caused by an increase in catastrophe losses and higher general operating and other expenses. This was partially offset by Global Commercial’s strength and improved net investment income.
American International Group, Inc. Price, Consensus and EPS Surprise
Premiums of $5.7 billion declined 13.1% year over year in the quarter and missed the Zacks Consensus Estimate of $5.8 billion. Total net investment income increased 18.3% year over year to $990 million, attributable to increased income from fixed maturity securities and dividends received from Corebridge Financial. The metric beat the consensus mark of $9.8 million.
Total benefits, losses and expenses fell 9.3% year over year to $5.9 billion. The year-over-year decline came on the back of lower policyholder benefits and losses incurred, and amortization of deferred policy acquisition costs. This was partially offset by higher general operating and other expenses.
Adjusted return on common equity of AIG was 6.2%, which improved 70 basis points (bps) year over year.
Segmental Performances
General Insurance
The segment recorded net premiums written of $6.9 billion, which declined 8% year over year on a reported basis and rose 7% on a comparable basis. The metric benefited from Global Commercial Lines growth in the second quarter. North America Commercial Lines benefited from new business production and new business offerings, whereas International Commercial Lines benefited from improved renewal retention and strong new business.
Underwriting income of $430 million declined 28% on a reported basis and rose 2% on a comparable basis. The metric benefited from strong contributions of International Commercial and Personal Insurance lines. Catastrophe losses rose 29.5% year over year to $325 million. The combined ratio of 92.5% deteriorated 160 bps year over year or 10 bps on a comparable basis, attributable to an increase in catastrophe loss ratio.
Adjusted pre-tax income declined 10.8% year over year to $1.2 billion, lower than the Zacks Consensus Estimate of $1.3 billion.
Other Operations
Net investment income rose a whopping 171% year over year in the second quarter due to a dividend income from Corebridge and improved income from the parent’s short-term investments.
Interest expenses declined 17% due to a debt reduction. Adjusted pre-tax loss narrowed from $278 million to $158 million.
Financial Position (As of Jun 30, 2024)
AIG exited the second quarter with a cash balance of $1.4 billion, which dropped from $1.5 billion at 2023-end. Total assets of $167.9 billion declined from $539.3 billion at 2023-end.
Long-term debt amounted to $9.9 billion, which declined from $10.4 billion at 2023-end.
Total equity of $44 billion fell from $45.4 billion at 2023-end. Total debt to total capital was 18.1% at the second-quarter end, which deteriorated 130 bps year over year.
Adjusted book value per share declined 7.3% year over year to $72.78.
Capital Deployment Update
AIG rewarded shareholders to the tune of share repurchase worth $1.7 billion and distributed common and preferred dividends of $261 million.
Deconsolidation Update
AIG completed the deconsolidation of Corebridge in the second quarter. AIG, now retains an ownership of 48.4% in Corebridge.
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Marsh & McLennan Companies, Inc. (MMC - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) beat the Zacks Consensus Estimate.
Marsh & McLennan reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year. Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis. The top line, however, fell short of the consensus mark by 1%. MMC’s adjusted operating income was $1.72 billion, which grew 11% year over year. Adjusted operating margin improved 130 bps year over year to 29%.
The Risk and Insurance Services segment’s revenues were $4.02 billion, which advanced 8% year over year and 7% on an underlying basis. Adjusted operating income advanced 12% year over year to $1.34 billion. Revenues of Marsh, a unit within the segment, improved 8% year over year and 7% on an underlying basis to $3.27 billion. In the United States/Canada, underlying revenues grew 6% year over year. International operations also witnessed underlying revenue growth of 7%.
Brown & Brown’s second-quarter adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line increased 17.7% year over year. Total revenues of $1.2 billion beat the consensus estimate by 3.3%. The top line improved 12.5% year over year. The upside can be primarily attributed to commission and fees, which grew 11.4% year over year to $1.1 billion.
Organic revenues improved 10% to $1 billion. Investment income more than doubled year over year to $22 million. Adjusted EBITDAC was $420 million, up 17.3% year over year. EBITDAC margin expanded 150 bps year over year to 35.7%.
Kinsale Capital delivered second-quarter net operating earnings of $3.75 per share, which outpaced the Zacks Consensus Estimate by 6.5%. The bottom line increased 30.4% year over year. Operating revenues jumped 45.1% year over year to $378 million. Revenues beat the consensus estimate of $377 million. Gross written premiums of $529.8 million rose 20.9% year over year. Net written premiums climbed 17.9% year over year to $430.2 million.
Net investment income increased 48.3% year over year to $35.8 million. Kinsale Capital’s underwriting income was $76.1 million, which grew 23.6% year over year. The combined ratio deteriorated 100 bps to 77.7% in the quarter under review. The expense ratio deteriorated 10 bps to 21.1, while the loss ratio deteriorated 60 bps to 56.6.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
AIG Q2 Earnings Miss Estimates on High Catastrophe Losses
American International Group, Inc. (AIG - Free Report) reported second-quarter 2024 adjusted earnings per share of $1.16, which missed the Zacks Consensus Estimate by 16.6%. However, the bottom line improved 9.4% year over year.
Operating revenues amounted to $6.6 billion, which declined 11.8% year over year. However, the top line significantly missed the consensus mark.
The weaker-than-expected results were caused by an increase in catastrophe losses and higher general operating and other expenses. This was partially offset by Global Commercial’s strength and improved net investment income.
American International Group, Inc. Price, Consensus and EPS Surprise
American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote
Quarterly Operational Update
Premiums of $5.7 billion declined 13.1% year over year in the quarter and missed the Zacks Consensus Estimate of $5.8 billion. Total net investment income increased 18.3% year over year to $990 million, attributable to increased income from fixed maturity securities and dividends received from Corebridge Financial. The metric beat the consensus mark of $9.8 million.
Total benefits, losses and expenses fell 9.3% year over year to $5.9 billion. The year-over-year decline came on the back of lower policyholder benefits and losses incurred, and amortization of deferred policy acquisition costs. This was partially offset by higher general operating and other expenses.
Adjusted return on common equity of AIG was 6.2%, which improved 70 basis points (bps) year over year.
Segmental Performances
General Insurance
The segment recorded net premiums written of $6.9 billion, which declined 8% year over year on a reported basis and rose 7% on a comparable basis. The metric benefited from Global Commercial Lines growth in the second quarter. North America Commercial Lines benefited from new business production and new business offerings, whereas International Commercial Lines benefited from improved renewal retention and strong new business.
Underwriting income of $430 million declined 28% on a reported basis and rose 2% on a comparable basis. The metric benefited from strong contributions of International Commercial and Personal Insurance lines. Catastrophe losses rose 29.5% year over year to $325 million. The combined ratio of 92.5% deteriorated 160 bps year over year or 10 bps on a comparable basis, attributable to an increase in catastrophe loss ratio.
Adjusted pre-tax income declined 10.8% year over year to $1.2 billion, lower than the Zacks Consensus Estimate of $1.3 billion.
Other Operations
Net investment income rose a whopping 171% year over year in the second quarter due to a dividend income from Corebridge and improved income from the parent’s short-term investments.
Interest expenses declined 17% due to a debt reduction. Adjusted pre-tax loss narrowed from $278 million to $158 million.
Financial Position (As of Jun 30, 2024)
AIG exited the second quarter with a cash balance of $1.4 billion, which dropped from $1.5 billion at 2023-end. Total assets of $167.9 billion declined from $539.3 billion at 2023-end.
Long-term debt amounted to $9.9 billion, which declined from $10.4 billion at 2023-end.
Total equity of $44 billion fell from $45.4 billion at 2023-end. Total debt to total capital was 18.1% at the second-quarter end, which deteriorated 130 bps year over year.
Adjusted book value per share declined 7.3% year over year to $72.78.
Capital Deployment Update
AIG rewarded shareholders to the tune of share repurchase worth $1.7 billion and distributed common and preferred dividends of $261 million.
Deconsolidation Update
AIG completed the deconsolidation of Corebridge in the second quarter. AIG, now retains an ownership of 48.4% in Corebridge.
Zacks Rank
AIG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Insurers
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Marsh & McLennan Companies, Inc. (MMC - Free Report) , Brown & Brown, Inc. (BRO - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) beat the Zacks Consensus Estimate.
Marsh & McLennan reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year. Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis. The top line, however, fell short of the consensus mark by 1%. MMC’s adjusted operating income was $1.72 billion, which grew 11% year over year. Adjusted operating margin improved 130 bps year over year to 29%.
The Risk and Insurance Services segment’s revenues were $4.02 billion, which advanced 8% year over year and 7% on an underlying basis. Adjusted operating income advanced 12% year over year to $1.34 billion. Revenues of Marsh, a unit within the segment, improved 8% year over year and 7% on an underlying basis to $3.27 billion. In the United States/Canada, underlying revenues grew 6% year over year. International operations also witnessed underlying revenue growth of 7%.
Brown & Brown’s second-quarter adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line increased 17.7% year over year. Total revenues of $1.2 billion beat the consensus estimate by 3.3%. The top line improved 12.5% year over year. The upside can be primarily attributed to commission and fees, which grew 11.4% year over year to $1.1 billion.
Organic revenues improved 10% to $1 billion. Investment income more than doubled year over year to $22 million. Adjusted EBITDAC was $420 million, up 17.3% year over year. EBITDAC margin expanded 150 bps year over year to 35.7%.
Kinsale Capital delivered second-quarter net operating earnings of $3.75 per share, which outpaced the Zacks Consensus Estimate by 6.5%. The bottom line increased 30.4% year over year. Operating revenues jumped 45.1% year over year to $378 million. Revenues beat the consensus estimate of $377 million. Gross written premiums of $529.8 million rose 20.9% year over year. Net written premiums climbed 17.9% year over year to $430.2 million.
Net investment income increased 48.3% year over year to $35.8 million. Kinsale Capital’s underwriting income was $76.1 million, which grew 23.6% year over year. The combined ratio deteriorated 100 bps to 77.7% in the quarter under review. The expense ratio deteriorated 10 bps to 21.1, while the loss ratio deteriorated 60 bps to 56.6.