Things are looking up for AIG in 2012. Their first three quarters have been successful and they have paid back the remainder of the government loan that they received. AIG plans to announce their third quarter earnings numbers tomorrow, just following the two day stock market closure due to Hurricane Sandy. According to “AIG Earnings Will Show Solid Growth in Q3 Pre-Sandy,” The Trefis Team said that they expect AIG insurance company’s top growth to continue. In the second quarter of this year, their net income increased 27% from the same quarter last year. AIG’s stock is selling for around $35 per share.
Property and Casualty insurance accounts for the largest amount of AIG’s business, around two-thirds of their revenue. The third quarter of last year was when natural disasters took a huge chunk from AIG and other insurance companies’ profits. Hurricane Irene and Tropical Storm Lee were the two largest events accounting for much of the $574 million in losses the company had in the third quarter. Up until this week, insurers had an easy year without large natural disasters and claims. But Hurricane Sandy changed all that and although AIG’s third quarter numbers will remain low, there will be some large losses and claims this fourth quarter.
Eleven percent of AIG’s revenues come from their retirement business. Variable annuities are an increasing focus because they have remained very popular with Americans. AIG gained variable annuity market share in the first half of this year, partly by capitalizing on leader MetLife’s decreasing focus on the products. They went from having 4.5% of the market share to 5.7% earlier this year. Along with that, they had a 20% increase in their sales of variable annuities. They have expanded their distribution network in the U.S. after obtaining broker dealer Woodbury Financial from Hartford Financial Services Group. Trefis forecasts that AIG will continue gaining market share in the U.S. in the near future and believes they should also focus on more international growth.
Written by Rachel Summit
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As MetLife scales back on their variable annuities, other companies are picking up the market share. According to Bloomberg Business News’ “Prudential Joins AIG Taking Annuities Share From MetLife,” Zachary Tracer says that Prudential and AIG are the main companies who have capitalized on MetLife’s variable annuity changes. Prudential has sold the most variable annuities this year, according to LIMRA. Their second quarter sales were $5.35 billion, which was an 18% increase. Their market share went from 11% at this time last year up to 14% this year. Prudential’s vice chairman attributes their sales gain to changes that competitors made, making Prudential’s products even more attractive to investors.
