American International Group Inc (AIG) Earnings: What To Love

No. 3: Goals
CEO Robert Benmosche noted that the company’s goals for the coming months are to continue improvements in operations and cost reductions. With his comments in the company’s press release, he noted that he is open to all opportunities to achieve those goals. So AIG has decreased its interest expense through calls and cash tender offers for outstanding debt. The American International Group Inc (NYSE:AIG) parent company has also allocated an additional $5.5 billion for future maturities. With half of the company’s employees outside of the US, AIG is looking into new chances to implement changes with both personnel and technology to capture savings. By reducing costs, the company will also be reducing its combined ratio, which will bring it closer to the levels achieved by its closest competitors.

A reason to hate?
While the majority of its rivals reported increases in premiums, propelling revenue higher for the first quarter, AIG reported a 4.3% decrease in net premiums. Without the ability to raise premiums, American International Group Inc (NYSE:AIG) will be limited in its opportunities to grow revenue streams from its insurance operations. But without the impact of currency exchange rates, catastrophic loss bond issuance, and some other factors, actual premiums grew by 4% during the quarter — more closely aligning AIG with the improvements seen with other insurers’ earnings reports.

Bonus!
During the first quarter, AIG’s book value has continued to rise, topping out at $59.39 — a 12% increase from the prior year. For current investors in the insurer, this is great news, as the company’s stock continues to trade below book value. For prospective investors, this poses a 41% upside from American International Group Inc (NYSE:AIG)’s closing price on Thursday of $42.13.

As we move past earnings season, be sure to keep an eye out for more news of AIG developments. The company’s goals are aligned with a true desire to improve itself and move past the legacy of a failed institution from the financial crisis. With many on Wall Street behind it, more and more investors may find a new opportunity with AIG.

The article 3 Reasons to Love the AIG Earnings Report originally appeared on Fool.com and is written by Jessica Alling.

Fool contributor Jessica Alling has no position in any stocks mentioned. You can contact her here. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: Long Jan 2014 $25 Calls on American International Group.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.