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MIGA

AIG in the red as pandemic, US unrest rock earnings

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AIG says the impacts from COVID-19 “remain manageable” despite estimated losses of $US458 million ($633 million) from the pandemic in the second quarter.

The virus health crisis, along with $US126 million ($174 million) in US civil unrest-related losses and $US90 million ($124 million) in natural catastrophe claims, combined to push the general insurance arm to an underwriting loss of $US343 million ($474 million) during the period. The division made an underwriting profit of $US147 million ($203 million) in the corresponding period last ear.

Adjusted pre-tax income for the division shrank 82% to $US175 million ($242 million).

“We are effectively navigating the current complex environment due to the strong foundation we built over the past three years,” CEO Brian Duperreault said. “While unprecedented and ongoing, COVID-19 remains an earnings, not a capital, event for AIG.”

At the group level, AIG recorded a net loss of $US7.9 billion ($10.9 billion) in the June quarter, against a net income of $US1.1 billion ($1.52 billion) from a year earlier.

The insurer says the results partly reflect an after-tax loss of $US6.7 billion ($9.3 billion) from the sale and deconsolidation of its majority 76.6% stake in reinsurer Fortitude Re for $US2.2 billion ($3.04 billion). .

In the general insurance arm, gross written premium fell 2% to $US8.5 billion ($11.8 billion) while the combined ratio blew out by 8.2 points to 106%.

The division’s underwriting losses in North America worsened sharply to $US419 million ($579 million) from $US5 million ($6.9 million) a year earlier, as commercial lines and personal insurance produced deficits of $US385 million ($532 million) and $US34 million ($47 million) respectively.

In the international market, underwriting profit declined 50% to $US76 million, dragged down by a $US13 million ($18 million) loss in commercial lines and 12% fall in earnings to $US89 million ($123 million) in personal insurance.