Updated Aug 13 at 11:26am ET.
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The company reported adjusted profit of $2.00 per share, which was higher than the $1.92 analysts expected. While total revenue of about $7.1 billion was slightly lower than predicted, the core insurance business performed well. Net premiums written, which is the total amount customers pay for new policies, grew 9 percent to $7.5 billion.
A key highlight was the combined ratio of 89 percent. This number tracks how much an insurer pays out in claims and expenses for every dollar it takes in. Anything under 100 percent means the company is making a profit on its insurance alone, before even counting what it earns on its investments. Improving this ratio shows the company is being careful about which risks it chooses to cover. Management also continued to return cash to owners, spending $641 million to buy back its own shares and $263 million on dividends. This is possible because the company has finished spinning off its life insurance arm, leaving it with a simpler, more focused business model.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
CEO Eric Anderson noted that rising global tensions are creating more demand for specialized insurance. Clients navigating high-risk areas like the Strait of Hormuz need more coverage, which allows the company to use its expertise to price these complex risks for a profit. The company is also focusing on the buildout of artificial intelligence. Providing insurance for the massive data centers and new technology being built gives it a way to grow alongside the tech sector. This focus on specialized, hard-to-price areas is a key part of how the company aims to keep its profit margins high.
Source: Bloomberg Markets and Finance
The company is set to report its latest results today. Analysts expect earnings of about $1.92 per share on revenue of roughly $7.25 billion.
For those watching the long-term shift, the focus is on the combined ratio, which measures how much the company pays out in claims versus what it collects in premiums. A lower number means more disciplined underwriting. We are also looking for updates on how the company is using its extra cash for buybacks and its final steps in separating from its former life insurance arm.
Analysts at Piper Sandler changed their view on the stock from a buy-equivalent to neutral. They set a price target of $80, which is very close to where the stock currently trades. This suggests the firm sees limited room for the stock to rise in the near term after its recent run.
Source: Piper Sandler
Cantor Fitzgerald analysts began following the company with a positive outlook, setting a price target of $92. This suggests they see about 15 percent upside from current levels. The move reflects growing confidence in the company's ability to grow its core insurance business as it finishes its multi-year restructuring.
Source: Cantor Fitzgerald
Analysts have kept a steady hand on AIG following its recent earnings report. Currently, 16 of 41 analysts rate the stock a buy, and the average price target of $87 suggests a 14% increase from today's price.
AIG has a very consistent habit of beating expectations, often by a wide margin. This suggests management is conservative with its forecasts and the business is running more efficiently than expected.
| Expectation | |
|---|---|
| EPS | $1.80 |
| Revenue | $7.48B |
