American International Group, Inc. (AIG) delivered outstanding second-quarter results on Thursday, driven by impressive growth in its General Insurance segment, and meaningful contribution from Life and Retirement.
Shares of the global insurance and finance company are up over 2% on Friday at the time of writing. (See American International Group stock charts on TipRanks)
The company reported adjusted earnings of $1.52 per share, up a whopping 137.5% compared to the year-ago period, beating the analysts’ estimate of $1.17 per share.
Under the company’s General Insurance segment, net premiums written increased 24% year-over-year to $6.86 billion, primarily attributable to favorable rate increases, higher renewal retentions, and strong new business production in its Commercial Lines.
Under AIG’s Life and Retirement segment, premiums and deposits grew 58% year-over-year to $9.04 billion, driven by overall industry-wide sales recovery.
On July 14, AIG announced a strategic partnership with Blackstone Group (BX), under which Blackstone will acquire a 9.9% equity stake in AIG’s Life and Retirement business for $2.2 billion in cash. Per the terms of the deal, BX is likely to manage Life and Retirement’s existing investment portfolio.
During the quarter, AIG repurchased around 5 million shares of common stock valuing $230 million. That being said, on August 3, the company increased its share buyback authorization to $6 billion, including $900 million unutilized from the prior authorization.
Peter Zaffino, the company’s president and CEO, said, “We continue to make significant progress on strategic priorities and position AIG for sustainable profitable growth over the long-term.
“We have incredible momentum as we head into the second half of the year and I am confident that we will continue to execute on our transformation and growth strategy.”
Following the Q2 results, Wells Fargo analyst Elyse Greenspan maintained a Hold rating on the stock with a price target of $53 implying 3.8% upside potential from current levels.
“AIG is positioned to benefit from the improving commercial lines pricing environment, although our neutral stance is predicated on the company spinning out its Life & Retirement business segment,” said Greenspan. “We believe that this will take time and AIG will likely use proceeds from the sale to pay down leverage (versus capital return or organic growth opportunities).”
Furthermore, the analyst expects investors to react positively to the company’s solid premium growth, margin improvement, and increased share buyback authorization of $6 billion.
Based on four Buys and six Holds, the stock has a Moderate Buy consensus rating. The average American International Group price target of $53.70 implies 4.9% upside potential to current levels.
Related News:
Datadog Shares Hit Record High on Blowout Q2 Results
HubSpot Reports Robust Q2 Results and CEO Transition; Shares Pop
Wynn Resorts Exceeds Q2 Expectations as Properties Re-Open
