Insurance company American International Group (AIG) announced a 67-percent profit decrease in its recent fourth-quarter earnings report, citing debt redemption and additions to reserves as the primary reasons for its unfavorable status.
AIG's net income dropped to $655 million (46 cents per share) in the fourth quarter of fiscal year 2014 from $1.98 billion ($1.34 per share) a year earlier.
"We'll look back and say 2014 was a transitional year and 2015 will show some operational progress," Sanford C. Bernstein & Co analyst Josh Stirling told the New Hampshire Voice prior to the publication of the report.
The company is said to be undergoing changes in leadership as well as financial restructuring in an effort to restore profits. AIG will also begin issuing new bonds at lower interest rates, granting permission for the repurchase of $2.5 billion worth of stock.
Nonetheless, the insurance company has reassured investors that it is taking the necessary steps to improve its profit decrease. In coming months, AIG leadership will begin focusing on its new approach to insurance.
"Our fourth quarter results showed progress on expense control, ongoing investments in our businesses, and our commitment to balance sheet management," AIG President and Chief Executive Officer Peter Hancock said in a statement, according to Forbes.
"AIG's diversified and balanced business mix allowed for stable total insurance profits. We continued to optimize our funding profile by replacing high-cost legacy debt with new issuances at lower interest rates."
AIG was founded in 1919 in Shanghai, China and is headquartered in New York City, USA.
