AIG Earnings Preview Q3


AIG Earnings Preview Q3

AIG (NYSE:AIG) will release its quarterly earnings on Monday, November 3rd after the market closes.

AIG Hancock

AIG CEO, Peter Hancock

Investors will be introduced to new Chief Executive Peter Hancock, whom replaced Robert Benmosche on September 1st.

Continued improvement in Property & Casualty

The highlight of the second quarter was the improved ratio of the Property & Casualty division and investors and analysts will expect the company to continue to show improvement. Investors will continue to monitor Property and Casualty which for the three months ended June 30th had a combined ratio of 98.8, a 3.8% decline from 102.6.

Share Buy-backs

With the stock struggling in the quarter, investors will hope that the accelerated buy back pace of the 2nd quarter was maintained in the 3rd.  The company repurchased 18.1 million shares for $1.1 billion in the 2nd quarter, and has over $2 billion remaining authorized.

Company continued to manage liabilities in the Quarter

The company continued to effectively repurchase high cost debt and reissue longer term debt in the quarter.

AIG continues to optimize its debt structure. On September 29th they announced the redemption of 8.25% notes due in 2018, and had previously redeemed $750 million notes with a 3.00% coupon due in 2015, $750 million 4.875% notes due in 2016, and $1.25 billion 3.8% notes due in 2017. Its long-term debt had declined to $38.4 billion as on Jun 30, 2014 from $41.75 billion at 2013-end level owing to effective liability management.

In the 2nd quarter and 3rd quarter,  AIG  issued $1.0 billion of 2.30% senior notes due 2019, $1.5 billion of 4.500% notes due 2044. and closed on the sale of $750 million 4.5% notes due all the way in 2044. Comparing the length and rate of what was redeemed and what was issued says a lot. In the 2nd quarter interest expense declined 7.4% owing to these optimizations.

Wall Street Expectations

Analysts are expecting the company to post earnings of 1.09 cents of share excluding certain expenses, compared to 96 cents year ago. Revenue is expected to be at $8.79 billion up from $8.66 billion.

 


 

Disclaimer: This article is for informational purposes only and should not be considered specific investment advice or as a solicitation to buy or sell any securities. Author is long AIG, and AIG Warrants, may buy or sell without notice. Do your own diligence before buying or selling any stock.

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