News

American International Group, Inc. AIG is set to report its first-quarter 2024 results on May 1, after the closing bell.

What Do the Estimates Say?

The Zacks Consensus Estimate for first-quarter earnings per share of $1.66 declined by 2 cents over the past week. The estimate is indicative of a 1.8% increase from the year-ago quarter’s reported earnings of $1.63 per share. However, the Zacks Consensus Estimate for revenues is pegged at around $12 billion, suggesting a decline of 2.7% from the year-ago quarter’s reported figure.

AIG’s earnings beat estimates in all the trailing four quarters, with an average surprise of 11%. This is depicted in the graph below.

American International Group, Inc. Price and EPS Surprise

Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at AIG’s previous-quarter performance first.

Q4 Earnings Rewind

In the last reported quarter, the leading global insurance organization’s adjusted operating earnings of $1.79 per share beat the Zacks Consensus Estimate by 12.6% due to strong underwriting results in the International business and North America Personal Insurance business of the General Insurance unit and higher net investment income. However, the upside was partly offset by higher expenses, as well as reduced sales of Variable Annuities in the Life and Retirement unit and lower financial lines premiums in the General Insurance.

Now, let’s see how things have shaped up before the first-quarter earnings announcement.

Q1 Factors to Note

In the first quarter, improved retention, new business and continued growth in the premium rates are expected to have boosted the performance of the General Insurance business. Profits from the segment are expected to have increased due to improving underwriting income from International Commercial lines and higher net investment income.

The Zacks Consensus Estimate and our model estimate for General Insurance adjusted pre-tax income of $1.3 billion for the first quarter indicate an increase of more than 4% from the year-ago period. The Zacks Consensus Estimate for the combined ratio for total General Insurance is pegged at 90.7%, down from 91.9% in the year-ago period.

AIG still remains the majority shareholder in Corebridge (the Life and Retirement business) following several secondary offerings and combines its results of operations in its Condensed Consolidated Financial Statements. The consensus mark for adjusted pre-tax income for the overall Life and Retirement business is pegged at $996.2 million, signaling a jump of nearly 12% from the prior-year quarter. Our model predicts a 14% rise in the metric.

The Zacks Consensus Estimate for net investment income indicates a 7.1% increase from the year-ago period, while our model suggests almost 10% growth, thanks to improved reinvestment rates and higher alternative investment income.

The factors stated above are expected to have positioned AIG for year-over-year growth in profit levels. However, the Zacks Consensus Estimate for total premiums indicates a 7.8% decrease from the year-ago period, whereas our model predicts a 7% fall.

Furthermore, when considering expenses, our model projects a year-over-year increase of more than 17% in general operating and other expenses, with interest expenses exceeding the $310 million mark. These factors could impact profit growth and cast uncertainty on the likelihood of an earnings beat. Nevertheless, the impact of its transformative program, AIG 200, is expected to have alleviated some pressure on the company's bottom line during the quarter under review.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for American International this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP is -0.49%. This is because the Most Accurate Estimate currently stands at $1.65 per share, lower than the Zacks Consensus Estimate of $1.66.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AIG currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for AIG, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Skyward Specialty Insurance Group, Inc. SKWD has an Earnings ESP of +7.99% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Skyward Specialty’s bottom line for the to-be-reported quarter suggests a 57.1% year-over-year increase to 66 cents per share. The estimate remained stable over the past week. The consensus mark for SKWD’s revenues is pegged at $215.7 billion, a jump of 32.5% from a year ago.

Horace Mann Educators Corporation HMN has an Earnings ESP of +15.03% and is a Zacks #3 Ranked player.

The Zacks Consensus Estimate for Horace Mann’s bottom line for the to-be-reported quarter indicates a 234.8% year-over-year increase. The estimate remained stable over the past week. Furthermore, HMN beat earnings estimates in three of the past four quarters and met once, with the average surprise being 15.2%.

Enact Holdings, Inc. ACT has an Earnings ESP of +5.05% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Enact Holdings’ bottom line for the to-be-reported quarter is pegged at 99 cents per share, which remained stable over the past week. ACT beat earnings estimates in each of the past four quarters, with an average surprise of 24.6%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.