American International Group is the latest insurer to announce a significant dip in profit in the last quarter of 2014, following the news that
Zurich pulled in 20% less than it had in the same year previous.
While Zurich managed to exceed analyst expectations, however,
AIG missed Wall Street targets as its profit fell 67% to $655 million. The company attributed the loss mainly to the extinguishing of debt during last year’s fourth quarter, as well as efforts to strengthen
AIG’s reserves.
Analysts had anticipated AIG to end the year at $1.05 per share—not the 46 cents per share is announced Thursday.
For the whole of 2014, AIG took in $7.5 billion in net income, down about 18% from the same period in 2013.
AIG President and CEO, who recently replaced Robert Benmosche as leader of the insurance company, called 2014 a “year of transition” and emphasized AIG’s efforts to improve its debt profile.
“Our fourth quarter results showed progress on expense control, ongoing investments in our business and our commitment to balance sheet management,” Hancock said. “AIG’s diversified and balanced business mix allowed for stable total insurance profits.
“We continued to optimize our funding profile by replacing high-cost legacy debt with new issuances at lower interest rates.”
Along with its earnings results, AIG announced a $2.5 billion buyback program. This would bolster the company’s repurchase of $4.9 billion in shares that it executed in 2014.
It was not enough to keep shares of AIG out of negative territory, however. The stock was down 0.38% when trading closed Thursday.
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