AIG shares gain the most in three weeks on Friday, insurer reports third-quarter earnings well below estimates

American International Group Inc’s (AIG) third-quarter earnings, reported on Friday, fell short of Wall Street estimates, as income at its life and retirement business dropped.

AIG shares closed higher for a third consecutive trading session in New York on Friday. It has also been the sharpest daily surge since October 10th. The stock went up 1.51% ($0.80) to $53.76, after touching an intraday high at $53.88, or a price level not seen since October 22nd ($54.29).

Shares of American International Group Inc have risen 36.41% so far in 2019 compared with a 22.34% gain for the benchmark index, S&P 500 (SPX).

In 2018, AIG’s stock went down 33.85%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

Pre-tax income from AIG’s life and retirement business shrank 9% year-on-year to $646 million during the quarter ended on September 30th due to a charge of $143 million associated with a review of its actuarial assumption.

Adjusted pre-tax income from the business, which excludes the impact from the actuarial review, went down 3% year-on-year as a result of elevated mortality and lower returns on alternative investments.

Meanwhile, net income attributable to common shareholders was reported at $648 million ($0.72 per share) during the third quarter, after the insurer posted a net loss of $1.26 billion ($1.41 per share) in the year-ago period.

However, earnings per share, which exclude special items, were reported at $0.56 during the latest quarter, far missing a consensus of analyst estimates of $1.00 per share.

AIG’s net pre-tax catastrophe loss, on the other hand, was reported at $511 million during the third quarter, narrowing from $1.6 billion in the year-ago period.

Analyst stock price forecast and recommendation

According to CNN Money, the 16 analysts, offering 12-month forecasts regarding American International Group Inc’s stock price, have a median target of $61.50, with a high estimate of $68.00 and a low estimate of $46.00. The median estimate represents a 14.40% upside compared to the closing price of $53.76 on November 1st.

The same media also reported that at least 11 out of 20 surveyed investment analysts had rated American International Group Inc’s stock as “Buy”, while 8 – as “Hold”.