AIG Sinks on Widening Net Loss

By Chris Lange Updated Jan 12, 2:49PM EST · Published Feb 15, 6:13AM EST

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[cnxvideo id=”625483″ placement=”ros”]American International Group Inc. (NYSE: AIG) reported fourth-quarter financial results after markets closed on Tuesday. The net loss in the quarter grew to $3.04 billion, or $2.96 per share, compared to $1.84 billion and $1.50 in the same period of last year.

The fourth quarter included a $5.6 billion ($3.56 per share) impact from prior-year adverse reserve development.

Return on equity (ROE) in the quarter was −14.7%, compared to last year’s number of −7.8%. However, normalized ROE was 4.8%, versus 6.6%.

The board of directors also approved a repurchase authorization of $3.5 billion. The remaining repurchase authorization going forward, including this amount, totals $4.7 billion. The board also declared a quarterly dividend of $0.32 per share on AIG common stock, par value $2.50 per share. The dividend is payable on March 29, 2017, to stockholders of record at the close of business on March 15, 2017.

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Book value per common share was $76.66 for the quarter, up from $75.10 last year. Adjusted book value per share totaled $58.57, versus $58.94 at the end of the same period of last year.

Peter D. Hancock, AIG’s president and CEO, commented:

We took decisive actions in 2016 to dramatically reduce uncertainty and deliver higher quality, more sustainable earnings in the future. The comprehensive adverse reserve development cover significantly reduces the risk of further reserve additions in some of the most volatile lines, and we responded definitively to emerging severity trends that we believe are materially impacting the overall U.S. Casualty market. Going forward, we expect to see the results from our improved underwriting platform, reduced expense base, and the strong improvement in our business mix. We remain committed to continuing to execute our clearly defined transformation plan, as well as achieving our financial goals, including the return of the remainder of the $25 billion to shareholders we announced in January of last year subject to regulatory and rating agency considerations and future profitability improvements.

Shares of AIG closed Tuesday up 1% at $66.89, with a consensus analyst price target of $72.00 and a 52-week trading range of $48.41 to $67.47. Following the earnings release, the stock was initially down 3% at $64.85 in the after-hours trading session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.