American International Group (AIG) Tops Q3 EPS by 12c

American International Group (NYSE: AIG) reported Q3 EPS of $1.21, $0.12 better than the analyst estimate of $1.09. Revenue came in at $8.95 billion, with the consensus at $8.57 billion.

“I am excited to lead AIG forward and further build on our capabilities to serve all our stakeholders,” said AIG President and Chief Executive Officer Peter Hancock. “Our new management structure brings together a team that has the skill set, experience, and commitment to execute on our strategies and serve our customers around the world. Together, we remain disciplined in our approach to balancing growth, profitability, and risk and focused on maintaining the strength of our industry-leading balance sheet.

“The solid third quarter results were driven by consistent performance across our businesses,” Mr. Hancock said. “While no one quarter is a trend, our risk-adjusted return focus could be seen in various metrics including improved accident year loss ratios, modest net spread compression, and continued capital management. In the quarter and through early October, we repurchased $1.5 billion of AIG Common Stock and completed over $4.0 billion in liability management, excluding DIB activities. As a result of our strong capital position and a positive outlook for our businesses, the Board has authorized additional share repurchases of $1.5 billion.”

Capital and Liquidity

• AIG shareholders’ equity totaled $108.6 billion at September 30, 2014
• Book value per share of $77.35 grew 15 percent from September 30, 2013; book value per share excluding accumulated other comprehensive income (AOCI) and deferred tax assets (DTA) grew 15 percent to $58.11 over the same period
• Repurchased 24.8 million shares of AIG Common Stock in the third quarter of 2014, including 1.7 million shares received in July 2014 upon the settlement of an accelerated share repurchase agreement executed in the second quarter of 2014 and including the initial delivery of approximately 8.8 million shares pursuant to a $692 million accelerated share repurchase agreement executed in September 2014, which settled in October 2014 with the delivery to AIG of approximately 3.9 million additional shares
• Tax sharing payments to AIG Parent from insurance businesses amounted to $314 million in the third quarter of 2014 and $1.1 billion year-to-date
• During the third quarter of 2014, AIG issued $1.0 billion of 2.300% Notes due 2019 and $1.5 billion of 4.500% Notes due 2044. In October 2014, AIG issued an additional $750 million of 4.500% Notes due 2044
• During the third quarter of 2014, AIG repurchased, in tender offers, certain high coupon hybrid and senior notes issued or guaranteed by AIG Parent, for an aggregate purchase price of $2.5 billion; in October 2014, AIG repurchased $1.6 billion aggregate principal amount of 8.175% hybrid notes
• During the third quarter of 2014, AIG reduced Direct Investment book (DIB) debt by approximately $2.0 billion through a redemption of $790 million aggregate principal amount of its 4.875% Notes due 2016 and a redemption of $1.25 billion aggregate principal amount of its 3.800% Notes due 2017, in each case, using cash allocated to the DIB. In October 2014, AIG further reduced DIB debt through a redemption of approximately $2.0 billion aggregate principal amount of its 8.250% Notes due 2018 and the repurchase of approximately $405 million aggregate principal amount of its 5.450% Medium-Term Notes, in each case, using cash allocated to the DIB
• AIG Parent liquidity sources were $17.1 billion at September 30, 2014, including $12.6 billion of cash, short-term investments, and unencumbered fixed maturity securities, down from $18.5 billion at June 30, 2014

For earnings history and earnings-related data on American International Group (AIG) click here.

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