American International Group Stock To Post Mixed Results In Q4

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AIG
American International Group

American International Group (NYSE: AIG) is scheduled to report its fiscal Q4 2022 results on Wednesday, February 15, 2023 (after market close). We expect AIG to post mixed results, with revenues being slightly above the consensus estimates and earnings missing the mark by a small margin. The insurance giant reported lower-than-expected revenues in the last quarter, despite a 14% y-o-y increase in the total revenues to $14.6 billion. The revenue growth was driven by an increase in the total net realized gains from $660 million to $3.2 billion, followed by a 4% rise in premiums. However, it was partially offset by a 28% drop in the net investment income (NII). We expect the total premiums to see some improvement in Q4.

Our forecast indicates that  American International Group’s valuation is $71 per share, which is 15% more than the current market price of around $62. Our interactive dashboard analysis on American International Group’s Earnings Preview has more details. 

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(1) Revenues expected to edge past the consensus estimates

American International Group’s revenues grew 18% y-o-y to $44.85 billion in the first nine months of 2022. It was mainly due to a significant jump in net realized gains from $1.98 billion to $10.99 billion, partially offset by a 23% decline in net investment income.

  • The total premium figure improved by 2% y-o-y in the first three quarters of 2022. We expect it to see some growth in Q4. 
  • NII decreased 23% y-o-y in the first nine months of 2022 due to lower returns from alternative investments and a drop in the fair value of fixed maturity securities. We expect the Q4 results to be on similar lines.
  • Overall, we forecast AIG’s GAAP revenues to remain around $57.12 billion in FY2022 and $52.07 billion in FY2023.

Trefis estimates AIG’s fiscal Q4 2022 revenues to be around $12.07 billion, 2% above the $11.80 billion consensus estimate. 

(2) EPS is likely to miss the consensus estimates

AIG Q4 2022 adjusted earnings per share (EPS) is expected to be $1.25 per Trefis analysis, 3% below the consensus estimate of $1.29. The adjusted net income increased 78% y-o-y to $9.98 billion in the first three quarters of 2022, primarily driven by growth in the top line and lower expense as a % of revenues. We expect the same trend to continue in the fourth quarter. 

Moving forward, AIG is likely to report an annual GAAP EPS of $7.24 in FY2023.

(3) Stock price estimate is 15% more than the current market price

We arrive at  American International Group’s valuation, using a GAAP EPS estimate of around $7.24 and a P/E multiple of just below 10x in fiscal 2023. This translates into a price of $71, which is 15% more than the current market price of approximately $62. 

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year 

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 Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 AIG Return -2% -2% -5%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio 0% 11% 251%

[1] Month-to-date and year-to-date as of 2/14/2023
[2] Cumulative total returns since the end of 2016

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