Global insurance provider American International Group (AIG -0.20%) disclosed first-quarter results on Wednesday, May 1, that outperformed analysts' expectations with robust revenue and EPS growth. The company, better known as AIG, demonstrated exceptional operational efficiencies, with adjusted EPS registering at $1.77 against the estimated $1.66. It also improved on last year's result.
The quarter underscored AIG's strategic initiatives bearing fruit even amid challenging market conditions.
| Metric | Q1 2024 | Analyst Estimate | Q1 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.77 | $1.66 | $1.63 | 8.6% |
| Total revenue | $12.58 billion | $11.63 billion | $10.98 billion | 14.5% |
| General Insurance segment income | $596 million | N/A | $502 million | 19% |
| Life and Retirement segment profit | $991 million | N/A | $886 million | 12% |
| Catastrophe-related charges | $106 million | N/A | $264 million | -60% |
| Loss ratio | 1.9 | N/A | 4.2 | -55% |
Analyst source: FactSet. YOY = Year over year. EPS = earnings per share. Loss ratio = Loss and loss adjustment expenses incurred divided by the net premiums earned.
About American International Group
AIG is a leader in the global insurance market, offering a wide range of products from general to life and retirement insurance. With an extensive network and customer base around the world, AIG leverages its industry expertise to deliver insurance solutions. The company's recent strategic directions focus on optimizing operations and capitalizing on profitable growth opportunities. This includes sharpening underwriting standards and innovating product offerings.
Quarterly highlights
During the first quarter of 2024, AIG not only met expectations, it exceeded them. It showcased remarkable strength in its General Insurance segment, with a 19% rise in underwriting income and a significant improvement in its combined ratio (up 1.1 points to 91.1). Catastrophe-related charges were $106 million, about half what was expected. This performance illustrates AIG's proficient risk management and operational optimizations.
The Life and Retirement segment also reported positive outcomes, benefiting from higher base portfolio income (up 12% year over year) and robust sales, emphasizing AIG's competitive edge and attractiveness of its product offerings. Additionally, AIG's commitment to shareholder value was evident through significant actions to effectively manage its capital. this includes reducing AIG's stake in the Corebridge life and retirement business, which it is in the process of spinning off.
Noteworthy, too, was the company's revenue beat, which can be attributed in part to increased net investment income (up 11% year over year). This reflects AIG's adept investment strategies amid evolving market dynamics. Other capital management efforts, including $1.7 billion in share repurchases and an 11% raise in its dividend to $0.40 a share, underscore the company's solid liquidity position and commitment to enhancing shareholder returns.
Looking ahead
Looking into the future, investors are encouraged to monitor AIG's adherence to underwriting discipline, investment management effectiveness, and progress in capital optimization strategies. While no specific forward guidance figures were disclosed, the emphasis on technological advancements, cybersecurity measures, and adaptation to regulatory environments suggests a proactive approach to navigating future challenges and capitalizing on opportunities. Key to AIG's ongoing success will be its ability to continue executing its strategic plans effectively, against the backdrop of potential market volatilities and regulatory changes.
