Key Takeaways From AIG’s Q4 Earnings
AIG (NYSE: AIG) reported its fourth-quarter earnings on Thursday, February 8. The company’s earnings of $0.57 missed consensus expectations by $0.18, primarily because of lower premiums and catastrophe losses. Total revenue for the quarter declined by almost 3% year-on-year to $12.6 billion. However, the EPS improved significantly. While the Q4 2016 EPS was -$2.72 because of poor underwriting and investment results, Q4 2017 EPS saw a marked improvement. Below, we have summarized AIG’s earnings. You can also take a look at our interactive dashboard that outlines the company’s performance as well as outlook for 2018, and gives you the ability to modify certain inputs that impact the EPS and Revenues.
Strong Showing From Life & Retirement Segment
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Premiums from the Life & Retirement Segment saw 167.7% year-on-year growth this quarter. While premiums from Individual Retirement and Group Retirement remained fairly stagnant, premium from Life Insurance grew by 7.8% driven by sales of Universal Life and Term Life. However, the largest contributor was Institutional Market sub-segment that saw 464% year-on-year growth. This was largely driven by growth in the Pension Risk Transfer (PRT) business. Adjusted Pre-Tax Income for the segment, however, was down from $866 million in Q4’16 to $782 million in Q4’17 due to higher expenses.
General Insurance Segment Continues To Struggle
The California wildfires were extremely destructive, resulting in over $3.3 billion of insured losses. AIG’s catastrophe losses of $682 million, largely due to the wildfires, were significant. As a result, profits from the General Insurance Segment were put under pressure and the combined ratio was at 113.3%. Additionally, premium declined by 10% on account of divestitures and strategic actions on underperforming business lines.
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