Earlier this week we told you that AIG was expecting to report its lowest second quarter profit since the financial crisis (see article
) – and now the results are in.
As expected, profits are down significantly – slumping by 59% if comparing the first six months of this year to the first six months of 2015. Overall its net profit stood at $1.73 billion (approximately £1.3 billion) – that’s a slip from $4.27 billion last year.
However, its second quarter results were arguably better than expected with a 6.3% increase in net income as it purposefully reduced the amount of insurance it sold and cut costs aggressively, particularly relating to its property and casualty operations. However, that didn’t stop its operating income for the quarter dropping 41% - largely due to a leap in catastrophe claims, particularly those relating to the Fort McMurray wildfires in Canada.
Its results are the first since adding billionaire activist Carl Icahn to its board, along with hedge fund manager John Paulson.
Going forward, analysts will be looking for AIG to deliver on a promise to return at least $25 billion of share buybacks and dividends through 2017 – the goal is set to be built around divestitures, including the sale of a stake in its United Guaranty mortgage insurance unit.
Speaking about the results, AIG chief executive Peter Hancock commented that they “show strong improvement” and that the company is highly confident of reaching 2017 financial targets.
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AIG to be rocked by lowest second quarter profit since financial crisis