American International Group Inc. Watches Earnings Fall 10% to $1.8 Billion in First Quarter

AIG witnessed significant increase in its losses as a result of growing claims in its insurance operations and its operating income fell by more than $200 million, to $1.21 per share.

May 5, 2014 at 8:56PM

American International Group (NYSE:AIG) reported today that its operating income per share fell to $1.21 in the first quarter, down almost 10% from the $1.34 seen in the first quarter of 2013.


"I am very pleased with AIG's solid operating profits this quarter," said the CEO of AIG, Robert Benmosche, in the earnings announcement. "The earnings power of our business coupled with our customer strategy reinforce the strength of our foundation throughout our core insurance operations."

In total AIG saw its operating income fall from $2.0 billion in the first quarter of last year to $1.8 billion in the most recent quarter. This was largely the result of its property casualty segment seeing its pre-tax operating income fall by 26%, or almost $400 million, to $1.2 billion.

The company noted the reason behind declining income at its property casualty business was a greater impact from catastrophe and severe losses as well as an unfavorable loss reserve development, and reduced investment income. In total its catastrophe and severe losses stood at $448 million in the first quarter of 2014, versus $101 million last year.

The property casualty business at AIG saw its combined ratio -- its losses and expenses divided by the premiums it earned -- rise from 97.3% in the first quarter of last year to 101.2% in the first quarter of this year. On a positive note, while on a dollar basis its net premiums written fell by 1%, the company noted excluding the effect of foreign exchange, its premiums increased by 3%.

The decline in its property casualty business came from both its commercial and consumer insurance underwriting operations. Its commercial line had its underwriting income fall 71%, from $396 million to $113 million. In addition, its consumer insurance underwriting business swung from an income of $55 million in the first quarter of last year to a loss of $59 million in the most recent quarter.

The Life and Retirement business at AIG did see a gain of 2% in its operating income, growing by $23 million to $1.4 billion. It saw its premiums and deposits rise by 28% year over year, and its assets under management rose by 9% to $324 billion.

"As we look to build upon the important work we have already done, we must continue to develop and grow our company so that it is more sustainable," added Benmosche in his prepared remarks. "We have made great strides in this transformation and in showing what we are capable of as a company, but we still have work to do. Above all else, we must operate and make sound business decisions as a company whose number one priority is to understand and provide for its customers."


Patrick Morris owns shares of American International Group. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: long January 2016 $30 calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers