Yahoo Finance AIG Is Returning Capital to Shareholders at a Record Pace
Alternative Investments Impact AIG Earnings, Core Getting Stable
Returning capital
American International Group (AIG) deploys its capital on new initiatives, technology upgrades, and expansion of product lines to increase its presence globally. In 2016, the company will make select investments in technology and innovation, and it will also return capital to its shareholders. The company rewards shareholders through dividends and stock repurchases.
AIG declared a 156% rise in its quarterly dividend on a year-over-year basis to $0.32 per share, translating into an annualized dividend yield of 2.3%. Its dividend yield has remained on par with other players in the Financial Select Sector SPDR ETF (XLF).
Other insurers have also repurchased their shares and returned capital to shareholders. Chubb (CB) has a dividend yield of 2.3%, Allstate (ALL) has a yield of 2.0%, and Metlife (MET) has a yield of 3.6%.
Share repurchases
In the first quarter of 2016, AIG repurchased approximately 63 million shares, or 5.6% of total outstanding shares, for an aggregate purchase price of $3.5 billion. The company made additional repurchases of approximately $870 million through the end of May 2, 2016.
AIG authorized the repurchase of additional shares with an aggregate purchase price of up to $5.0 billion. The company also increased the quarterly dividend by 156% to $0.32 per share. AIG aims to return at least $25 billion to shareholders by 2017.
AIG appears to be optimistic about capital flows in the Life Insurance business as well as the improved risk profile of the Property and Casualty business. However, it’s facing a huge dent from returns in alternative investments.
Browse this series on Market Realist:
