Comparative Financial Analysis of METLIFE and AIG

This paper intends to conduct a thorough financial analysis of METLIFE and AIG. Tools such as ratio analysis has been used in the paper to assess the financial position of the company. The estimated ratios of both the companies have been compared with that of the benchmark. Cash flow statements of the firms have also been included in the analysis.
1. Introduction
The report involves a thorough analysis of the financial statements of two major insurance companies in the world. What follows is an in-depth evaluation of financial performance of the US based publicly traded insurance giants, Metropolitan Life Insurance (MetLife) and American International Group (AIG), for the last three years. The evaluation will be done on the basis of financial information obtained from annual reports of company as well as from analyst’s reports. The report also seeks to explain the accounting policies adopted by the two corporations and identify the similarities and differences in the policies.
2. Reporting to shareholders
Both AIG and MetLife follow a conventional approach towards reporting its shareholders. The managers of both these companies provide a complete disclosure of the accounting policies that has been followed while preparing the annual reports. This makes it easier for the shareholders to have a good understanding of the information that is shared within the report. All the business operations of both the companies including the ones conducted by the subsidiaries are also provided in details within the reports. MetLife and AIG both follow a line of business segment reporting format which provides intricate details regarding the business generated by individual business segments of the respective companies. Financial information according to geographic region is also reported in the statements of both the companies. This allows shareholders to comprehend the performance of the respective companies in the global insurance industry.
The managers of both the companies emphasize a lot on sharing their risk exposures to the best of their knowledge in order to allow the shareholders to make an informed judgement regarding future investments. The dividends paid in the past as well as the expected dividends for the next quarter are also reported within the annual reports as a means to inform shareholders regarding the profit that is being distributed and the part that is being retained for future investments. With regards to the fact that has been mentioned in this section, it can be said that both the companies provide an absolute reflection of their financial position to their shareholders. Such an enhanced disclosure is stimulated by a robust governance framework implemented in both these companies.
One striking difference that was noted in the annual reports of AIG and MetLife is that the former is more inclined towards conveying what the company aims to in the following years. Besides providing a detailed explanation of the company’s financial position in the current year, managers of AIG also emphasize on explaining the company’s goals and strategies for growth in the future. However, MetLife sticks to presentation of the company’s current financial position without much focus on the long term strategies to be adopted. This is one particular aspect where AIG stays ahead of MetLife as the former is able to relate to the objective of its shareholders (which is to generate greater return) by conveying that this very goal of the shareholder is completely aligned with that of the company’s.


Comparative Financial Analysis of METLIFE and AIG

Type: Report
Domain: Financial Performance Analysis
Words: 2250
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