8 Insurers Report Q3 Earnings

AIG, Berkshire Hathaway and 6 others released their third-quarter results.

Insurance Networking News, November 5, 2012

Chris McMahon

A number of insurers, including Aetna, American Financial Group, AIG, Ameriprise Financial, Berkshire Hathaway, HCC Insurance Holdings, PartnerRe and Principal Financial Group, have begun to release their financial results for Q3 2012. The following is a compilation of their announcements.

Aetna Inc.

Aetna announced Q3 2012 operating earnings of $523.2 million, or $1.55 per share, compared with $528.4 million, or $1.40 per share, for the same quarter last year. Net income was $499.2 million, or $1.47 per share, compared with $490.4 million, or $1.30 per share, for the same quarter last year. Revenue increased 6 percent to $8,899.2 million from $8,396.7 million for the same quarter last year.

Operating earnings highlights for Q3 2012:

Health Care: operating earnings were $531.8 million, a 1.2 percent increase over $525.7 for the same quarter last year. Net income was $532.3 million, compared with $471.3 million for same quarter last year. Revenues were $8.24 billion, compared to $7.78 billion for Q3 2011.

Group Insurance (including group life, disability and long-term care): Operating earnings were $29.3 million for Q3 2012, compared with $37.9 million for the same quarter last year. Net income was $33.2 million, compared with $51.1 million for the same quarter last year. Revenues were $530.8 million, compared with $489.0 million for the same quarter last year.

American Financial Group Inc.

American Financial Group reported Q3 2012 net earnings $226 million, or $2.39 per share, compared to $97 million, or $0.95 per share, for the same quarter last year. The results include $148 million, or $1.57 per share, in after-tax non-core earnings, primarily the result of a $101 million sale of the company’s supplemental insurance businesses, realized gains on securities and the results of AFG’s tax case resolution, which were offset by a reserve strengthening related to the company’s asbestos and other environmental exposures.

“We are encouraged by the continued positive momentum in our annuity operations, which posted record profitability in the third quarter of 2012,” said AFG’s Co-CEOs Craig Lindner and Carl Lindner III. “P&C results were solid, especially considering the effects of the Midwest drought and a continued low interest rate environment. Teams in both of these areas of our business have successfully maintained the focus and exercised the discipline needed for strong core earnings.”

Book value per share increased by $1.98 to $42.72 per share during the quarter. Core net operating earnings were $78 million, or $0.82 per share, for Q3 2012, compared to $92 million, or $0.91 per share, reported in the same quarter last year. Higher profits in the annuity and supplemental insurance group were offset by lower underwriting earnings and lower investment income in the specialty P/C operations.

American International Group Inc.

AIG reported Q3 2012 net income of $1.9 billion and after-tax operating income of $1.6 billion, compared to a net loss of $4.0 billion and an after-tax operating loss of $3.0 billion for the same quarter last year. Diluted earnings per share was $1.13 and after-tax operating income per share was $1.00, compared with a diluted loss per share of $2.10, after-tax operating loss per share of $1.58 for the same quarter last year.

“AIG again posted a solid quarter, reflecting the continued strength of our core insurance operations and strong investment returns,” said Robert Benmosche, AIG president and CEO. “We are seeing continued momentum, and we’re building for the future by creating a more streamlined, efficient, and nimble company.

Highlights:

• AIG Property Casualty reported operating income of $786 million for Q3 2012, compared to $492 million for the same quarter last year.

• The Q3 2012 combined ratio was 105.0, compared to 105.9 for Q3 2011.

• Net premiums written for Q3 2012 was $8.7 billion, a 0.6 percent increase compared to Q3 2011.

• Commercial insurance reported Q3 2012 operating income of $321 million and a combined ratio of 107.1, compared to operating income of $405 million and a combined ratio of 107.2 for the same quarter last year.

• Consumer Insurance reported Q3 2012 operating income of $152 million and a combined ratio of 98.8, compared to $21 million and a combined ratio of 102.0 for the same quarter last year.

• AIG Life and Retirement reported Q3 operating income of $826 million, compared to $471 million in the same quarter last year.

• Net investment income for Q3 2012 was $2.6 billion, a $302 million increase from the third quarter of 2011.

Ameriprise Financial Inc.

Ameriprise Financial reported net income from continuing operations for Q3 2012 declined 46 percent to $ 174 million, or $0.79 per diluted share, compared with $322 million, or $1.33 per diluted share, for the same quarter last year. Operating earnings were $289 million, $1.32 per diluted share, compared to $289 million, or $1.19 per diluted share for the same quarter last year. The operating results included a previously announced unfavorable impact of $48 million, or $0.22 per diluted share, an annual review of insurance and annuity valuation assumptions and modeling changes; the non-cash expense compared to an unfavorable impact of $9 million, or $0.04 per diluted share, a year ago. At $2.5 billion for the quarter, net revenues were unchanged. Operating expenses were unchanged at $2.1 billion.

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