AIG cuts workforce by 3% after earnings beat
American International Group reported quarterly earnings and revenue that easily beat analysts' expectations on Thursday and announced it will cut its workforce by 3 percent because of a charge taken in the fourth quarter.
In a company memo, AIG CEO Robert Benmosche said, "With results today, we announced a $265 million severance charge taken at the end of 2013, which we expect will reduce AIG's global workforce by approximately 3 percent."
Shares rose as much as 2 percent in after-hours trading.
The company posted fiscal fourth-quarter earnings excluding items of $1.15 per share, up from 20 cents a share in the year-earlier period.
Revenue increased to $8.62 billion from $8.61 billion a year ago.
Analysts had expected the company to report earnings excluding items of 96 cents a share on $8.56 billion in revenue, according to a consensus estimate from Thomson Reuters.
The insurer announced that it boosted its quarterly divined by 25 percent, to nearly 13 cents per share. The company also said it was increasing its stock buyback by $1 billion.
A dearth of natural disasters in 2013 helped the insurance industry as a whole, and AIG is expected to be in better shape than it was last year after Superstorm Sandy hit the eastern United States, according to the International Business Times.
It also sold off a few businesses not directly related to insurance, including one deal in December where it unloaded an aircraft leasing business to a Dutch company, AerCap, for $5.4 billion.
The insurer has been expanding its reach in property and casualty and maintaining strong sales in its U.S. life and retirement operations, according to a recent article in Forbes.
But the pendulum may swing back the other way soon enough. The Houston Business Journal reported Thursday that AIG has made some commercial real estate loans, albeit small ones, to some projects in Houston.