AIG Adds to Buyback Program After Profits Leap

Banking, finance, and taxes

Published: April 30, 2015 4:25 pm

Last Updated: April 27, 2020 3:22 pm

American International Group Inc. (NYSE: AIG) reported first quarter 2015 earnings after markets closed on Thursday. For the quarter, the multinational insurer posted adjusted diluted earnings per share (EPS) of $1.78. In the same period a year ago, the company reported EPS of $1.09. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $1.19.

On an after-tax operating basis the insurer posted EPS of $1.22 which included net realized capital gains of $874 million net of tax. Of that total some $565 million was associated with the sale of two large shareholdings. AIG reported after-tax operating income per diluted share of $1.18 in the first quarter of last year.

Operating results in the first quarter of 2015 reflected improved underwriting results in commercial Insurance, lower alternative investment returns compared with a year ago, as well as the continued effect of the low interest rate environment on net investment income. After-tax operating income reflected an unfavorable year-over-year impact from changes in the discount on workers’ compensation reserves.

Net income totaled $2.5 billion for the quarter, up from $1.6 billion a year ago.

In the first quarter of 2015, the company repurchased approximately 29 million shares of AIG common stock for an aggregate purchase price of $1.4 billion.

AIG did not offer guidance for the 2015 second quarter or for the full year, but the consensus estimates call for full-year EPS of $4.91. For the second quarter the consensus calls for EPS of $1.21.

The company’s CEO said:

We continued to proactively manage our capital resources through both common stock and debt repurchases. We further optimized our funding profile by replacing high-cost legacy debt with new issuances at lower yields. These actions reflect our improved risk profile, and combined with continued insurance company distributions, have contributed to the Board’s approval of an additional $3.5 billion share buyback authorization.

The company’s shares closed down about 0.6% on Thursday and were inactive in the after-hours market, at $56.29 in a 52-week range of $48.56 to $58.73. The consensus target price for the shares was around $62.00 before today’s report.

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