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American International Group, Inc. AIG reported third-quarter 2024 adjusted earnings per share of $1.23, which beat the Zacks Consensus Estimate by 8.9%. The bottom line improved 18.3% year over year.

Adjusted operating revenues amounted to $6.84 billion, which declined 5.9% year over year. However, the top line beat the consensus mark by 3.3%.

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The better-than-expected third-quarter results were supported by higher returns on investments and lower costs. The positives were partially offset by lower premiums.

American International Group, Inc. Price, Consensus and EPS Surprise

American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote

AIG’s Quarterly Operational Update

Premiums of $5.9 billion declined 9.1% year over year in the quarter but beat the Zacks Consensus Estimate by 3.9%. Total net investment income increased 13.7% year over year to $973 million, attributable to increased income from fixed maturity securities, alternative investments and dividends received from Corebridge Financial, Inc. CRBG. The metric beat the consensus mark by 11.2%. It now has a 48.6% ownership interest in Corebridge.

Total benefits, losses and expenses fell 1.1% year over year to $6.1 billion. The year-over-year decline came on the back of lower policyholder benefits and losses incurred, and amortization of deferred policy acquisition costs. This was partially offset by higher general operating and other expenses.

Adjusted return on equity of AIG was 6.8%, which improved 150 basis points (bps) year over year.

Segmental Performances of AIG

General Insurance

The segment recorded net premiums written of $6.38 billion, which declined 1% year over year on a reported basis and rose 6% on a comparable basis. The metric benefited from Global Commercial Lines and Global Personal Insurancegrowth in the third quarter, partially offset by Validus Re divestiture.

Underwriting income of $437 million declined 28% on a reported basis and 21% on a comparable basis. The metric was affected by increased catastrophe charges and decreased favorable prior-year development. Catastrophe-related chargesfell 9.7% year over year to $417 million. The combined ratio of 92.6% deteriorated 240 bps year over year.

Adjusted pre-tax income declined 11% year over year to $1.21 billion, but beat the Zacks Consensus Estimate by 6%.

Other Operations

Net investment income rose a whopping 178% year over year to $125 million in the third quarter due to a dividend income from Corebridge and improved income from the parent’s short-term investments.

Interest expenses declined 17% due to a debt reduction. Adjusted pre-tax loss narrowed from $278 million to $143 million.

Financial Position of AIG (As of Sept. 30, 2024)

AIG exited the third quarter with a cash balance of $1.47 billion, which dropped from $1.54 billion at 2023-end. Total assets of $169.45 billion declined from $539.31 billion at 2023-end.

Long-term debt amounted to $9.89 billion, which declined from $10.38 billion at 2023-end.

Total equity of $45.1 billion fell from $51.3 billion at 2023-end. Total debt to total capital was 17.9% at the third-quarter end, up from the 2023-end level of 16.8%.

Adjusted book value per share declined 9.1% year over year to $73.90.

AIG’s Capital Deployment Update

AIG rewarded its shareholders to the tune of repurchased shares worth $1.5 billion and distributed dividends of $254 million.

Zacks Rank & Key Picks

AIG currently has a Zacks Rank #3 (Hold).

Investors interested in the broader Finance space may look at some better-ranked players like Root, Inc. ROOT and Brown & Brown, Inc. BRO. While Root currently sports a Zacks Rank #1 (Strong Buy), Brown & Brown carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for ROOT’s current-year earnings indicates an 88.2% year-over-year improvement. It beat earnings estimates in each of the trailing four quarters, with an average surprise of 127.2%. Furthermore, the consensus estimates for Root’s 2024 revenues indicates 147.9% year-over-year growth.

The Zacks Consensus Estimate for Brown & Brown’s current-year earnings is pegged at $3.73 per share, which indicates 32.7% year-over-year growth. It has witnessed four upward estimate revisions against none in the opposite direction in the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 6.9%.

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