American International Group, Inc. is a diversified global insurer providing property/casualty and life/retirement products whose balance sheet shows conservative leverage (debt-to-equity 0.00) and steady equity compounding (5‑year book value per share CAGR 7.56%).
The company demonstrates several operational strengths: trailing‑12‑month operating cash flow was $16.91 billion (period ended 2010-12-31), supporting core underwriting and investment activities, and interest coverage stood at a healthy 16.03x, indicating ample earnings relative to interest expense. On a per‑share basis, the most recent revenue per share reported was $44.49 (period ended 2014-12-31) while diluted EPS in the available series was $2.38 (period ended 2012-12-31), showing revenue scale and positive per‑share earnings. The market multiple in the provided data is moderate with a trailing PE of 14.9x (2012-12-31), implying a single‑point valuation reference in that period.
See Strategic Capital Allocation, EPS Diluted & Revenue per Share and Price-to-Earnings (PE) Ratio Trend.
Material areas of concern include liquidity and return metrics: the most recent current ratio in the dataset is 0.4641, below 1.0, which signals short‑term liquidity tightness, and trailing‑12‑month return on equity was only 3.5% (2012-12-31), well under conventional strong‑ROE benchmarks. There is also a pronounced mismatch between cash flow and reported earnings in the available points — operating cash flow of $16.91 billion versus net income of $3.44 billion (most recent net income, 2012-12-31), a $13.47 billion gap — and the dataset shows a financing cash flow outflow of $36.93 billion (period ended 2011-12-31) that materially exceeded operating inflows.
See Revenue & Net Income, Earnings Quality Analysis and Strategic Capital Allocation.
Key fundamental metrics to monitor going forward include quarter‑to‑quarter trends in operating cash flow versus net income (OCF $16.91B vs Net Income $3.44B), improvement in the current ratio from 0.4641, trajectory of ROE from 3.5%, changes in book value per share growth relative to the 7.56% five‑year pace, and subsequent moves in the PE ratio from 14.9x; tracking these will clarify liquidity, profitability and capital allocation dynamics.
See Return on Equity (ROE), Revenue & EPS Growth and Price-to-Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
AMERICAN INTERNATIONAL GROUP, INC.'s reported quarterly revenue in the most recent quarters is variable rather than steadily rising. The dataset shows revenues of $15.97B (2015-03-31), $44.37B (2014-12-31), $16.65B (2014-09-30) and $3.39B (2014-03-31), indicating a pronounced spike in the December 2014 quarter compared with adjacent periods; excluding that spike, revenues in the available recent quarters cluster in the mid‑teens billions.
Net income observations in the series are limited to two dated points: $3.44B (2012-12-31) and $455.0M (2009-09-30), with the latest reported net income in the dataset being $3.44B. The most recent quarterly revenue was $15.97B. The most recent reported net income was $3.44B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2014 to Dec 2014, American International Group Inc generates $64.41B in revenue. The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Jan 2014 to Dec 2014
Analyzing long-term margin stability and competitive positioning
Understanding Profit Margins
Between Jan 2014 and Dec 2014, American International Group Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
The chart shows a marked disparity between trailing twelve-month net income and operating cash flow for AMERICAN INTERNATIONAL GROUP, INC.. The most recent net income observation in the dataset (period ending 2012-12-31) is $3.44B, while the most recent operating cash flow observation provided (period ending 2010-12-31) is $16.91B, a difference of $13.47B with cash flow exceeding reported earnings in those referenced periods.
The available data are not aligned to the same reporting date: the net income figure is the more recent data point (2012-12-31) and the operating cash flow figure is from an earlier reporting period (2010-12-31). The most recent Net Income (TTM) was $3.44B and the most recent Operating Cash Flow (TTM) was $16.91B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
For AMERICAN INTERNATIONAL GROUP, INC., the available ROE series contains a single trailing-twelve-month observation for the period ending 2012-12-31. With only one data point, no directional trend or inflection points can be established from the chart itself; the most recent quarter is the only information on management's return on shareholder equity in this dataset.
In the provided context, ROE values above roughly 15% are described as strong; the recorded ROE here is materially below that benchmark. The most recent trailing twelve-month Return on Equity (ROE) was 3.5% as of 2012-12-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
AMERICAN INTERNATIONAL GROUP, INC.'s trailing‑12‑month operating cash flow in the provided data is a positive $16.91B as of the period ending 2010‑12‑31.
The dataset shows a later trailing‑12‑month financing cash flow of negative $36.93B as of the period ending 2011‑12‑31; the financing outflow magnitude materially exceeds the operating inflow in these points. No investing cash flow (TTM) values are included in the provided data.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
The chart contains a single trailing twelve-month Price-to-Earnings observation for AMERICAN INTERNATIONAL GROUP, INC. as of the quarter ending 2012-12-31, showing a PE ratio of 14.9x. With only one data point available, the series does not display any multi-quarter trend, inflection point, or evidence of re-rating or de-rating.
Because no prior or subsequent quarterly values are shown, there is no intra-chart context to evaluate PE expansion, contraction, spikes, or a transition to negative/undefined PE. The most recent reported Price-to-Earnings ratio for AMERICAN INTERNATIONAL GROUP, INC. was 14.9x (2012-12-31).
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.