AIG Third Quarter Shows Increased Income, Analysts

October 31, 2000

American International Group has reported that its income excluding losses increased 14.6 percent to $4.1 billion in the third quarter and 14.4 percent to $4.21 billion for the first nine months of 2000.

Net income for the third quarter of 2000, including realized losses, increased 9.3 percent to $1.39 billion, compared to $1.27 billion in the same quarter last year. Revenues in the third quarter rose 15.6 percent to $11.14 billion over the previous year’s third quarter results, while revenues the first nine months totaled $33.46 billion, an increase of 12.8 percent over $29.66 billion for the same period 1999.

AIG Chairman M.R. Greenberg said the company saw increased momentum on the domestic commercial insurance pricing front, “strong results from our overseas general insurance business, an excellent quarter for life insurance and outstanding results in our financial services and asset management business.”

But shares of AIG, along with other P/C stocks could be in for a “correction” after a recent strong run according to anaylsts. SNL Insurance Weekly reported this week that Warburg analyst Michael Lewis downgraded his rating of AIG to “buy” from “strong buy” late last week despite the company’s third-quarter earnings, which fell in line with expectations.

He also lowered his price target from $110 to $105 per share.

“It was simply a valuation call,” Lewis was reported saying in the weekly newsletter. “The valuation has climbed nicely, and in order for me to justify a higher valuation I had to see a little more than they showed us in the quarter. It was a OK-for-AIG quarter, but not enough to justify further upward revaluation. The stock reflected its operating fundamentals at this point.”

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