Insurance Major AIG Reports Decline in Net Profit Due to Debt Redemption
Written by Marissa Donnelly
New Hampshire Voice
15 Feb 2015
Insurance major AIG reports decline in net profit due to debt redemption
American International Group (AIG) informed that its profit decreased 67 percent on costs to pay down debt and add to reserves. According to the earnings report shared by the New York-based insurer, net income dropped to US$655 million or US$0.46 per share in the fourth quarter in 2014 from US$1.98 billion or US$1.34 per share, a year earlier.
Operating profit was US$0.97 per share and it fell short of the US$1.06 average estimate of 22 analysts surveyed by Bloomberg. The operating profit does not include some results related to investing and debt redemptions.
AIG chief executive officer Peter Hancock has been putting efforts to improve results at the property-casualty operation after taking over in September 2104. Peter Hancock has also been revamping management.
To repay higher-cost debt AIG has been issuing new bonds at lower interest. AIG also took a US$824 million charge related to those efforts in the fourth quarter. When the announcement was made about the results, the stock lost US$0.3 to US$52.1 at 4:40pm in New York. According to market records, AIG grew 10 percent in 2014, trailing the 11.4% gain of the Standard & Poor’s 500 Index.
“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 board has given permission of the repurchase of US$2.5 billion of stock. Book value climbed to US$77.69 per share in December 31, 2014 from US$77.35 three months earlier.
According to AIG, the full year profit dropped to US$7.53 billion, and it is 17% lower than in 2013. Net investment income dropped 6.1% to US$3.97 billion in the fourth quarter because hedge-fund performance deteriorated. Private equity made US$206 million than US$286 million a year earlier.
New Hampshire Voice
15 Feb 2015
Insurance major AIG reports decline in net profit due to debt redemption
American International Group (AIG) informed that its profit decreased 67 percent on costs to pay down debt and add to reserves. According to the earnings report shared by the New York-based insurer, net income dropped to US$655 million or US$0.46 per share in the fourth quarter in 2014 from US$1.98 billion or US$1.34 per share, a year earlier.
Operating profit was US$0.97 per share and it fell short of the US$1.06 average estimate of 22 analysts surveyed by Bloomberg. The operating profit does not include some results related to investing and debt redemptions.
AIG chief executive officer Peter Hancock has been putting efforts to improve results at the property-casualty operation after taking over in September 2104. Peter Hancock has also been revamping management.
To repay higher-cost debt AIG has been issuing new bonds at lower interest. AIG also took a US$824 million charge related to those efforts in the fourth quarter. When the announcement was made about the results, the stock lost US$0.3 to US$52.1 at 4:40pm in New York. According to market records, AIG grew 10 percent in 2014, trailing the 11.4% gain of the Standard & Poor’s 500 Index.
“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 board has given permission of the repurchase of US$2.5 billion of stock. Book value climbed to US$77.69 per share in December 31, 2014 from US$77.35 three months earlier.
According to AIG, the full year profit dropped to US$7.53 billion, and it is 17% lower than in 2013. Net investment income dropped 6.1% to US$3.97 billion in the fourth quarter because hedge-fund performance deteriorated. Private equity made US$206 million than US$286 million a year earlier.
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