Wednesday, May 4, 2011

AIG (NYSE: AIG): Q1 Earnings Preview 2011

American International Group Inc. (NYSE: AIG) is scheduled to release its first-quarter earnings after the closing bell on Thursday, May 5, 2011. Analysts, on average, expect the company to post a loss of 15 cents per share on revenue of $14.97 billion. In the year ago period, the company reported a profit of $1.75 per share on revenue of $16.81 billion.

American International Group, Inc., through its subsidiaries, provides insurance and related services in the United States and internationally.  AIG's four reportable segments include: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services.

AIG was bailed out in 2008 by the U.S. government, which committed more than $180 billion to stabilize the insurance giant in the midst of the global financial crisis. Over the last year, the company has raised tens of billions of dollars through asset sales and IPOs of international units as it slimmed down and shifted focus.

In the preceding fourth-quarter, the New York-based company's net income was $11.18 billion, compared to a loss of $8.87 billion in the previous year. On a per share basis, net income for the quarter was $16.60, compared to a loss of $65.51 last year. Results for the quarter include a $4.2 billion net charge to strengthen Chartis loss reserves, gains of $17.6 billion from the sale of divested businesses and a gain of $4.1 billion from the sale of American Life Insurance Company.On an adjusted basis, net loss for the quarter widened to $2.21 billion or $16.20 per share from $1.34 billion or $9.88 per share a year ago. 

AIG has restructured itself and sold off a couple of businesses which were not deemed a part of its core insurance business. Its credit ratings and sales have also improved. 

During the quarter in review, the company sold 146.8 million shares of Metlife common stock and $3 billion of MetLife equity units, which it received as stock proceeds from the sale of its insurance subsidiary, American Life Insurance Co, or ALICO, to life insurer Metlife, Inc. (MET: News ) that was completed in November.

Early in March, AIG repaid about $6.9 billion to the U.S. Department of the Treasury, thus reducing the government's stake in the company. So far in 2011, AIG has paid about $36 billion to the Treasury in four major payments. The Treasury still holds about $11.3 billion of preferred interests in the company.

Last month, the company said that it expects $1 billion in catastrophe losses in the first quarter. The earthquake and tsunami that hit Japan on March 11 will account for $700 million of those losses, the insurer said. The company noted that the $1 billion number was a preliminary estimate that also includes losses related to the New Zealand earthquake, U.S. winter storms, northeast Australian floods, Cyclone Yasi, and the Brazil floods that have occurred in the first quarter so far. The loss is 1.1% of total AIG shareholders' equity at the end of 2010, the insurer added.

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