(Bloomberg) – American International Group Inc.’s assurances of underwriting progress are drawing increased skepticism from Wall Street analysts after another disappointing quarter.
Results from international commercial coverage and the American consumer business were short of estimates, “and this isn’t the first time those two areas have shown difficulty,” Michael Nannizzi of Goldman Sachs Group Inc. said Thursday on New York-based AIG’s conference call discussing third-quarter results. “What are you doing to get there, and how long is it going to take?”
AIG dropped $2.83, or 4.7 percent, to $57.72 at 10:48 a.m. in New York, extending the drop this year to 6.9 percent. While Chief Executive Officer Peter Hancock has been selling units, buying reinsurance and reshaping the investment portfolio to limit volatility, the company remains prone to surprises. He reported losses in three straight quarters through March 31, and announced results late Wednesday that missed analysts’ estimates.
In recent years, the company has faced higher-than-expected claims costs on commercial policies tied to workers’ compensation and environmental risks and suffered declines on hedge fund holdings. Third-quarter operating profit was $1 a share, missing by 20 cents the average estimate of analysts surveyed by Bloomberg, as costs swelled on contracts in which the insurer guarantees payments to accident victims.
Those deals, known as structured settlements, have been designated for a portfolio of businesses that AIG is seeking to exit or wind down. Hancock said he’s working on selling more assets that aren’t central to his strategy of focusing on commercial coverage and retirement products in key markets.
AIG’s third-quarter operating profit was $1 a share, missing by 20 cents the average estimate of analysts surveyed by Bloomberg. (Photo: Thinkstock)
“I make no promises as to what we will be able to dispose of” from the legacy portfolio, he said in a Bloomberg Television interview Thursday. “But we intend to dispose of it as quickly and as effectively as possible.”