(Bloomberg) — American International Group Inc., the largest commercial insurer in the U.S. and Canada, said profit declined 67 percent on costs to pay down debt and add to reserves.
Net income fell to $655 million, or 46 cents a share in the fourth quarter, from $1.98 billion or $1.34 a year earlier, the New York-based insurer said Thursday in a statement. Operating profit, which excludes some results tied to investing and debt redemptions, was 97 cents a share, missing the $1.06 average estimate of 22 analysts surveyed by Bloomberg.
Chief Executive Officer Peter Hancock has been revamping management and working to improve results at the property- casualty operation after taking over in September. AIG has been issuing new bonds at lower interest rates to repay higher-cost debt, and took an $824 million charge tied to those efforts in the fourth quarter.
“We’ll look back and say 2014 was a transitional year and 2015 will show some operational progress,” Josh Stirling, an analyst at Sanford C. Bernstein & Co. said by phone before results were announced.
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The stock lost 34 cents to $52.11 at 4:49 p.m. in New York, after results were announced. AIG advanced 9.7 percent last year, trailing the 11.4 percent gain of the Standard & Poor’s 500 Index.
The board authorized the repurchase of $2.5 billion of stock, according to the statement, after AIG bought back $4.9 billion of shares in 2014.
Book value, a measure of assets minus liabilities, rose to $77.69 per share on Dec. 31 from $77.35 three months earlier.
AIG said it issued $750 million of 4.5 percent notes due in 2044 while repurchasing about $2.8 billion in high-cost hybrid and senior notes in the fourth quarter. The company also cut debt tied to the direct investment book by $2.5 billion.
Full-year profit fell to $7.53 billion, 17 percent lower than in 2013, AIG said.