AIG Announces Restructuring; To Cut Jobs

(RTTNews) - American International Group, Inc. (AIG) announced restructuring initiatives that will focus on organizational simplification, operational efficiency, and business rationalization, which are expected to generate pre-tax annualized savings of approximately $0.4 billion to $0.5 billion when fully implemented. These initiatives are expected to result in pre-tax restructuring and other costs of approximately $0.5 billion including approximately $0.3 billion of employee severance and one-time termination benefits, concentrated initially among management's senior levels. Further staff reductions are anticipated in 2016.

Peter Hancock, AIG CEO, said: "Our strategy focuses on four major objectives: to narrow our focus on businesses where we can grow profitably, drive for efficiency, grow through innovation and optimizing our data assets, and return excess capital. We remain committed to achieving our three financial targets through 2017. We'll continue to proactively manage our capital by using our remaining $2.9 billion repurchase authorization to return capital to shareholders."

For the third-quarter, the company reported after-tax operating income of $691 million, or $0.52 per share, compared to $1.7 billion, or $1.19 per share, in the prior-year quarter. Compared to the prior-year quarter, third quarter operating results decreased due to lower income on hedge fund investments, lower income on assets marked to fair value through earnings, including part of AIG's holdings in People's Insurance Company (Group) of China Limited (PICC Group) and PICC Property & Casualty Company Limited (PICC P&C) shares and assets in Corporate and Other.

On a reported basis, AIG recognized a net loss of $231 million, or $0.18 per share, for the third quarter of 2015, compared to net income of $2.2 billion, or $1.52 per share, for the prior-year quarter. The company said the net loss was primarily due to lower income on hedge fund investments and assets marked to fair value through earnings, lower realized investment gains, and lower income from settlements of non-operating litigation.

The company announced that its Board declared a dividend of $0.28 per share on AIG Common Stock, par value $2.50 per share. The dividend is payable on December 21, 2015, to stockholders of record at the close of business on December 7, 2015.