American International Group Inc (AIG), the largest commercial insurer in the US and Canada, said profit declined 67 percent on costs to pay down debt and add to reserves.
Net income fell to US$655 million, or US$0.46 per share in the fourth quarter of last year, from US$1.98 billion or US$1.34 a year earlier, the New York-based insurer said on Thursday in a statement.
Operating profit, which excludes some results tied to investing and debt redemptions, was US$0.97 per share, falling short of the US$1.06 average estimate of 22 analysts surveyed by Bloomberg.
AIG chief executive officer Peter Hancock has been revamping management and working to improve results at the property-casualty operation after taking over in September last year.
AIG has been issuing new bonds at lower interest rates to repay higher-cost debt, and took a US$824 million charge tied to those efforts in the fourth quarter.
“We’ll look back and say 2014 was a transitional year and 2015 will show some operational progress,” Sanford C. Bernstein & Co analyst Josh Stirling said by telephone before results were announced.
The stock lost US$0.34 to US$52.11 at 4:49pm in New York, after results were announced. AIG advanced 9.7 percent last year, trailing the 11.4 percent gain of the Standard & Poor’s 500 Index.
The board authorized the repurchase of US$2.5 billion of stock, according to the statement, after AIG bought back US$4.9 billion of shares last year.
Book value, a measure of assets minus liabilities, rose to US$77.69 per share on Dec. 31 last year from US$77.35 three months earlier.
AIG said it issued US$750 million of 4.5 percent notes due in 2044 while repurchasing about US$2.8 billion in high-cost hybrid and senior notes in the fourth quarter. The company also cut debt tied to the direct investment book by US$2.5 billion.
Full-year profit fell to US$7.53 billion, 17 percent lower than in 2013, AIG said.
Net investment income slumped 6.1 percent to US$3.97 billion in the fourth quarter as hedge-fund performance deteriorated. Those holdings contributed US$86 million, down from US$446 million a year earlier, AIG said in a supplemental document on its Web site.
Private equity generated US$206 million, compared with US$286 million a year earlier. AIG mainly invests in bonds.
France cannot afford to ignore the third credit-rating reduction in less than a year, French Minister of Finance Roland Lescure said. “Three agencies have downgraded us and we can’t ignore this cloud,” he told Franceinfo on Saturday, speaking just hours after S&P lowered his country’s credit rating to “A+” from “AA-” in an unscheduled move. “Fundamentally, it’s an additional cloud to a weather forecast that was already pretty gray. It’s a call for lucidity and responsibility,” he said, adding that this is “a call to be serious.” The credit assessor’s move means France has lost its double-A rating at two of the
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS