American International Group Inc. (NYSE: AIG) announced on Monday that it expects to report third quarter 2017 pre-tax catastrophe losses net of reinsurance of $2.9 billion to $3.1 billion ($1.9 billion to $2.0 billion after-tax).
Hurricane Harvey caused approximately $1.1 billion to $1.2 billion in losses. Hurricane Irma estimates losses approximately $1 billion to $1.1 billion. Hurricane Maria estimates losses of $700 million. The earthquakes in Mexico also contribute approximately $150 million, according to AIG’s statement.
Morgan Stanley (NYSE: MS) analysts projected a net loss of $2.5 billion.
“Through AIG’s financial strength and long experience with natural catastrophes, our teams across the company have reacted quickly to provide our clients with the claim funds, resources, and expertise they need to recover and rebuild with greater resilience. We are proud of our response as a member of the industry and as a corporate citizen during this time of need.” said Brian Duperreault, President and Chief Executive Officer.
From Monday’s open to Tuesday’s open, AIG shares fell 1.7 percent in reaction to the company’s statement on the predicted losses.
But AIG shares were plummeting already prior to the hurricanes. AIG shares fell nearly 12 percent from its third quarter earnings on August 2 and going into Hurricane Irma.
AIG also released a statement saying that the company expects to report its third quarter earnings on November 2 for the quarter ending on September 30.
AIG has previously reported a net loss this significant previously. In the fourth quarter of the 2016 fiscal year, the company reported a net loss of over $3 billion or an EPS decrease of $-2.72, also missing analysts’ estimates by $3.90.
The loss in the fourth quarter of the fiscal year 2016 was a 39 percent net loss increase year over year. It also resulted in a net loss of $849 million for the entire 2016 fiscal year.
AIG shares plummeted by 9 percent from $66.89 to $60.85 after the company had released its earnings call that quarter.
Although AIG may report a significant net loss, analysts’ have raised their price targets. Bank of America Corp. has raised its price target for AIG to $69.00 a share, with 10 out of 15 rating AIG a buy.
Zacks analysts’ are forecasting an EPS loss of $-0.33 per share, with a high of $0.02 increase and a low of $-0.67 decrease.