American International Group Inc (NYSE: AIG) stock lost over 3.80% in the pre-market session of Feb 14th, 2019 (Source: Google finance). AIG in the fourth quarter of FY 18 has reported the adjusted loss per share of 63 cents, missing the analysts’ estimates for the adjusted loss per share of 42 cents, according to IBES data from Refinitiv. The company had reported the adjusted revenue growth of 35.9 percent to $12.33 billion in the fourth quarter of FY 18. The company said the version of its “combined ratio,” which excludes catastrophe losses, had declined to 98.8%, or 98.8 cents of each $1 of premium, from just over $1 in the year-earlier period.
The year-earlier results were hurt by a large charge stemming from federal tax-law changes to write down the value of tax assets. For the fourth quarter, net investment income declined nearly 20% and caused much of the damage as the company reported a net loss of $622 million. The company’s general insurance unit reported an underwriting loss of $1.1 billion, compared with a loss of $846 million a year ago, largely due to Hurricane Michael and the California wildfires. Net pretax catastrophe losses totaled $798 million, compared with $766 million in the year-earlier quarter. Net unfavorable prior year loss reserve development of $365 million in the fourth quarter of 2018. As of December 31, 2018, book value per common share was $65.04 compared to $72.49 at December 31, 2017.
Further, while mostly invested in high-quality bonds, large insurers like AIG invest a slice of their investment portfolios in hedge funds and private-equity funds. AIG cited net losses on alternative investments and equity securities, among other developments, in a challenging quarter for stocks and volatile credit markets. Net investment income fell to $2.8 billion from $3.5 billion.
AIG has declared a quarterly dividend of $0.32 per share on AIG Common Stock, par value $2.50 per share. The dividend is payable on March 29, 2019 to stockholders of record at the close of business on March 15, 2019. In the fourth quarter, AIG had repurchased 18.0 million shares of common stock for $745 million and warrants for $5 million. AIG has approved an increase in the share repurchase authorization to $2.0 billion, including approximately $512 million that was remaining under the previous authorization.