AIG Reports Third Quarter 2015 Results

3 November 2015 —
American International Group, Inc. today reported after-tax operating income of USD 691 million, or USD 0.52 per diluted share, for the third quarter of 2015, compared to USD 1.7 billion, or USD 1.19 per diluted share, in the prior-year quarter. Compared to the prior-year quarter, third quarter operating results decreased due to lower income on hedge fund investments, lower income on assets marked to fair value through earnings, including part of AIG's holdings in People's Insurance Company (Group) of China Limited (PICC Group) and PICC Property & Casualty Company Limited (PICC P&C) shares and assets in Corporate and Other. Lower GOE partially offset these decreases resulting from expense management actions surrounding a freeze of U.S. retirement plans.

On a reported basis, AIG recognized a net loss of USD 231 million, or USD 0.18 per diluted share, for the third quarter of 2015, compared to net income of USD 2.2 billion, or USD 1.52 per diluted share, for the prior-year quarter. Compared to the prior-year quarter, the third quarter net loss was primarily due to lower income on hedge fund investments and assets marked to fair value through earnings, lower realized investment gains, and lower income from settlements of non-operating litigation.

The restructuring initiatives will focus on organizational simplification, operational efficiency, and business rationalization, which are expected to generate pre-tax annualized savings of approximately USD 0.4 billion to USD 0.5 billion when fully implemented. These initiatives are expected to result in pre-tax restructuring and other costs of approximately USD 0.5 billion including approximately USD 0.3 billion of employee severance and one-time termination benefits, concentrated initially among management's senior levels. Further staff reductions are anticipated in 2016. Approximately half of the remaining USD 0.2 billion relates to costs associated with modernization of information technology platforms, with the balance relating to costs associated with consolidation of legal entities and exiting lower return lines of business.

"This quarter's results, while falling short of expectations due to market volatility, show signs that we are making progress to transform AIG for long-term competitiveness," said Peter D. Hancock, AIG President and Chief Executive Officer. "Our strategy focuses on four major objectives: to narrow our focus on businesses where we can grow profitably, drive for efficiency, grow through innovation and optimizing our data assets, and return excess capital.

"This quarter's restructuring actions mark the latest significant, visible steps in our transformation toward becoming more efficient, less complex, and able to respond to our clients' needs with greater agility. And they are consistent with our reorganization of our business around clients rather than products, and our efforts to streamline our footprint to focus on attractive opportunities, including the aging populations in the U.S. and Japan, International Property, travel insurance in China, and Japan.

"Over the last year, we've taken numerous actions to divest non-core assets and sculpt both our geographic presence and operating model to ensure efficient resource allocation going forward. In the third quarter, we monetized our remaining stake in AerCap, and in October we announced an agreement to sell our operations in four Central American countries, and further consolidated policy offerings in Japan. This urgent - yet disciplined - repositioning will more closely align our product expertise and distribution channels with the needs of our clients, and position AIG for future growth opportunities.

"We remain committed to achieving our three financial targets through 2017. We'll continue to make select investments in technology and innovation to build sustainable competitive advantages. And lastly, we'll continue to proactively manage our capital by using our remaining USD 2.9 billion repurchase authorization to return capital to shareholders. We remain confident in our strategy," Mr. Hancock concluded. Read the full story

AIG Reports Third Quarter 2015 Results
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