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American International Group was the latest insurer to post a significant drop in its profit for the fourth quarter of 2014, following news Zurich had pulled in 20% less revenue that it did during the same period one year ago.
While Zurich was able to exceed Wall Street expectations, AIG missed analysts’ projections as profit plunged by 67% to end the quarter at $655 million. AIG attributed the drop to its extinguishing of debt, during the fourth quarter of last year, along with efforts to strengthen reserves.
Analysts had expected AIG to end 2014 with earnings of $1.05 a share, not 46 cents a share that the insurer posted on Thursday.
For the full year 2014, AIG earned net income of $7.5 billion, which was down 18% from the same period one year ago.
AIG called this past year one of transition and emphasized the efforts of AIG to improve its debt profile.
A company spokesperson said that the results of the fourth quarter showed more progress with ongoing investments and expense control in the business and the commitment of the company to management of the balance sheet.
The AIG spokesperson added that the company continued to optimize its funding profile by exchanging high cost debt with new debt at interest rates that are lower.
Along with its results for earnings for the last quarter of 2014 and the full year AIG announced a stock repurchase program of $2.5 billion. This will add to the shares the company repurchased worth $4.9 billion during 2014.
However, the news did not keep AIG shares from dropping as the stock was off by 0.38% at the close of trading on Thursday.
Property casualty premiums earned fell by 2% to just over $5.02 billion. In personal insurance, AIG net premiums earned was down by 5% to $2.92 billion.