AIG reported a third quarter net loss, but the company president said that AIG is moving toward streamlining its operations and positioning itself for long-term competitiveness.
The company blamed the third quarter loss on lower investment income, earnings derived from the value of holdings abroad and a hefty restructuring charge of $274 million.
In August global equity markets dropped after the China reported lower-than-expected growth leading the Chinese government to devalue the currency.
That affected the value of AIG’s holdings in People’s Insurance Company (Group) of China Ltd. (PICC Group) and PICC Property & Casualty Co. Ltd., the company said.
Over the past year, the company has been selling assets as it seeks to slim down into a carrier focused around people and not products.
Last month, AIG announced an agreement to sell operations in Central America and continued with its plan to consolidate operations in Japan.
“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,” Peter D. Hancock, AIG president and CEO, said in a news release.
AIG reported a third quarter net loss of $231 million compared with a profit of $2.1 billion in the year-ago period. The third quarter net loss comes to 18 cents per share diluted.
After-tax operating income was $691 million or 52 cents per diluted share. The average of 10 analysts surveyed by Zacks Investment Research was for earnings of $1.03 per share, according to Automated Insights. Revenue in the third quarter slid to $12.8 billion from $16.6 billion in the year-ago period, the company also reported.
A hefty pre-tax restructuring charge of $500 million — $274 million of which was recorded in the third quarter and the remainder of which will be recognized through 2017— will also pay for streamlining the company and “business rationalization,” the company said.
AIG shares, which ended Monday’s session at $63.74, have climbed 14 percent since the beginning of the year, Automated Insights also reported.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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