What to Expect from American International Group Stock in Q2?


American International Group (NYSE: AIG) will release its second quarter 2022 results on Monday, August 8, 2022 (after market close). We expect AIG to miss consensus estimates for earnings and earnings. The insurance giant reported mixed results in its last quarter, with sales up 9% yoy to $15.8 billion. Revenue growth was driven by an increase in total premiums and higher net realized gains, partly offset by lower net investment income. Premiums benefited in particular from the growth in non-life and life insurance and pensions. We expect net investment income and premiums to improve in the second quarter.

Our prediction indicates that: Rating of American International Group is $69 per share, which is 35% more than the current market price of approximately $52. Our interactive dashboard analysis on Profit example of American International Group has more details.

(1) Revenue expected to remain marginally below consensus estimates

American International Group earnings rose 19% yoy in 2021 to $52.1 billion. This was driven by a 10% yoy increase in premiums and a 7% increase in net investment income.

  • Total premiums improved by 9% year-on-year in the first quarter of 2022, mainly driven by growth in non-life and life and pension businesses. We expect the same trend to continue in the second quarter.
  • NII is very important to the profitability of any insurance company, and AIG is no different. Revenue streams declined 11% yoy in the first quarter of 2022 as a result of lower yields on fixed-term available-for-sale securities. We expect the revenue stream to see some improvement in the second quarter.
  • Overall, we estimate AIG’s revenues will remain around $50.9 billion in FY2022.

Trefis estimates AIG’s fiscal revenue in the second quarter of 2022 to be approximately $11.18 billion, slightly lower than the consensus estimate of $11.25 billion.

(2) EPS probably misses the consensus estimates

AIG’s second quarter 2022 adjusted earnings per share are expected to be $1.04 per Trefis analysis, missing the consensus estimate of $1.10 by 5%. Adjusted net income increased from -$6 billion to $9.4 billion in 2021, partly due to higher revenues and partly due to lower total expenses as a % of revenue. Furthermore, the same trend continued in the first quarter of 2022. We expect expenses as a % of revenue to increase slightly in the second quarter. Overall, AIG will likely conduct an annual GAA
P EPS of $5.60 for FY2022.

(3) The stock price estimate is 35% higher than the current market price

we arrive at Rating of American International Groupwith a GAAP EPS estimate of about $5.60 and a P/E multiple of just over 12x in fiscal 2022. This translates to a price of $69, which is 35% more than the current market price of about $ 52.

Note: P/E multiples are based on year-end share price and reported (or projected) adjusted earnings for the full year

With inflation rising and the Fed raising interest rates, American International Group
has fallen by 9% this year. Can it go down even more? See how low American International Group’s stock can go by comparing the decline in past market crashes. Here’s a performance breakdown of all stocks in past market crashes.

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