American International Group Inc. (NYSE:AIG) late Tuesday posted a massive net loss for the fourth quarter, as the company deployed reserves to combat steep claims costs.

Written by StockNews.com

The New York City-based insurance giant reported a Q4 net loss of ($2.96) per share, which is likely not comparable to the Wall Street consensus estimate of $1.16. AIG noted that the fourth quarter results included a $5.6 billion, or ($3.56) per share, one-time impact related to adverse reserve developments from the prior year.

AIG’s normalized return on equity (ROE) was 4.8% in the fourth quarter, while Commercial Insurance net premiums written fell 20.2%.

On a positive note, AIG pledged to buy back even more of its own shares. Its new repurchase plan of $4.7 billion will replace its older $3.5 billion authorization.

The company commented via press release:

“We took decisive actions in 2016 to dramatically reduce uncertainty and deliver higher quality, more sustainable earnings in the future,” said Peter D. Hancock, AIG President and Chief Executive Officer. “The comprehensive adverse reserve development cover significantly reduces the risk of further reserve additions in some of the most volatile lines, and we responded definitively to emerging severity trends that we believe are materially impacting the overall U.S. Casualty market. Going forward, we expect to see the results from our improved underwriting platform, reduced expense base, and the strong improvement in our business mix. We remain committed to continuing to execute our clearly defined transformation plan, as well as achieving our financial goals, including the return of the remainder of the $25 billion to shareholders we announced in January of last year subject to regulatory and rating agency considerations and future profitability improvements.”

American International Group Inc. shares fell $2.22 (-3.32%) in after-hours trading Tuesday. Year-to-date, AIG has gained 2.42%, versus a 4.55% rise in the benchmark S&P 500 index during the same period.

AIG currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #3 of 59 stocks in the Insurance – Property & Casualty category.