Banking & Finance

AIG Takes On Restructuring Charge and Misses Earnings

American International Group Inc. (NYSE: AIG) reported its third-quarter financial results after the markets closed on Monday. The company had $0.52 in earnings per share (EPS) on $12.82 billion in revenue, compared to consensus estimates from Thomson Reuters that call for $1.03 in EPS on $14.22 billion in revenue. The same period from the previous year had $1.21 in EPS on $8.63 billion in revenue.

The company took on a restructuring charge of $500 million in the third quarter. The restructuring initiatives will focus on organizational simplification, operational efficiency, and business rationalization, which are expected to generate pretax annualized savings of about $400 to $500 million when fully implemented.

At the same time, AIG declared a dividend of $0.28 per share on its common stock, par value $2.50 per share. The dividend is payable on December 21, to stockholders of record at the close of business on December 7.

Peter D. Hancock, AIG President and CEO, commented on earnings:

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. 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.

He added:

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.

At the end of the quarter, the company had a book value per share, excluding AOCI and DTA, of $61.91 which increased 7% from last year.

Shares of AIG closed Monday up 1.1% at $63.74, with a consensus analyst price target of $68.39 and a 52-week trading range of $48.68 to $64.93. Following the release of the earnings report, shares were down 1.6% at $62.75 in the after-hours trading session.

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