INSURER American International Group Inc today posted a 56% fall in quarterly adjusted earnings, spurred partly by higher catastrophe losses and lower private-equity returns.
Adjusted after-tax income attributable to AIG common shareholders fell to US$571 mil (RM2.4 bil) in the second quarter ended June 30, from US$1.3 bil a year earlier.
Excluding items, AIG earned a profit of 66 cents per share compared with US$1.43 per share a year earlier, exceeding Factset expectations of 50 cents per share, the company said.
Shares of AIG, one of the largest US insurers, rose 3.7% in after-hours trading.
AIG posted an underwriting loss of US$343 mil in its general insurance business, compared with a US$147 mil profit a year earlier.
The loss included US$674 mil of catastrophes, net of reinsurance, partly reflecting US$458 mil related to Covid-19 and US$126 mil for civil unrest claims.
A decline in travel during the pandemic affected AIG’s travel insurance business.
Net adjusted investment income dropped US$537 mil from a year ago to US$3.2 bil.
Performance was hurt by US$276 mil in private-equity losses compared with US$238 mil in private-equity income a year ago which included a large gain from one of the holdings.
AIG’s general insurance accident year combined ratio excluding changes from losses incurred in past years, was 94.9 for the quarter, compared with 96.1 a year ago.
AIG has been using the metric to gauge the success of a turnaround plan launched by CEO Brian Duperreault upon taking the insurer’s helm in 2017.
A ratio below 100 means the insurer earns more in premiums than it pays out in claims.
Gross premiums written fell 2% to US$8.47 bil in the general insurance business.
AIG’s life and retirement unit posted US$881 mil in adjusted pre-tax income compared with US$1 bil a year ago, driven partly by private-equity losses and deaths from Covid-19.
AIG completed selling a 76.6% stake in its run-off company, Fortitude Group Holdings LLC, to Carlyle Group Inc and T&D United Capital Co Ltd on June 2.
The deal reduces risk on AIG’s balance sheet, the company said. – Aug 4, 2020, Reuters
