Considering the approaching earnings of American International Group (AIG), should one opt to purchase or offload its shares?
American International Group (AIG) is set to release its earnings on August 6, 2025, and investors are keeping a close eye on the company's performance. Since the spinoff of its life insurance and retirement segment, AIG has been focusing on property and casualty insurance.
Over the last five years, AIG has reported earnings data points 19 times, with 14 positive and 5 negative one-day returns. This translates to a positive one-day return about 74% of the time. Historical data comparing AIG's post-earnings performance with that of its peers shows a pattern of positive earnings surprises and corresponding stock price increases.
In the second quarter, the company is expected to show some recovery in underwriting results after a challenging first quarter due to catastrophic losses from the Los Angeles wildfires. The Trefis RV strategy has outperformed its all-cap stocks benchmark to deliver strong returns for investors.
Regarding the historical pattern of post-earnings returns, AIG’s stock typically experiences a positive immediate reaction following better-than-expected earnings results, driven by upward revisions to earnings expectations and positive management commentary. However, the sustainability of these price moves in the medium term depends heavily on future earnings guidance and market conditions.
The correlation between short-term and medium-term returns after earnings is less explicitly documented, but the available data suggests a positive short-term reaction to earnings surprises. The sustained medium-term performance appears influenced by subsequent earnings reports and broader market dynamics rather than following a simple correlated pattern with the immediate post-earnings return.
AIG currently has a market capitalization of $46 billion. Consensus estimates predict earnings per share of $1.60 and revenues of approximately $6.85 billion. Over the past twelve months, AIG's revenue was $27 billion, with net losses amounting to $-1.9 billion.
The company's expansion in commercial lines and international markets, along with strategic initiatives aimed at enhancing operational efficiency, could contribute positively to its performance. The correlation between 1D and 21D post-earnings returns for AIG, denoted as 1D_21D, is provided in the table below.
Investors seeking a steadier approach may want to consider the High Quality portfolio, which has surpassed the S&P and achieved returns greater than 91% since its inception. The median of the 14 positive returns is 2.6%, and the median of the 5 negative returns is -1.3%. The correlation between 1D and 5D post-earnings returns for AIG is also summarized in the table below.
[Table of correlation data]
[1] Source: Yahoo Finance, Seeking Alpha, Trefis [2] Source: Yahoo Finance, Seeking Alpha [3] Source: Seeking Alpha [4] Source: Investopedia [5] Source: Trefis
- Given AIG's history of positive one-day return PRAs after earnings surprises, investors might anticipate a positive immediate reaction from AIG's stock following its earnings release on August 6, 2025.
- The medium-term sustainability of AIG's stock price moves after earnings depends not just on elevated earnings expectations but also on future earnings guidance and market conditions, making a steadier investing approach potentially beneficial.
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