REUTERS: Insurer American International Group Inc on Monday (Aug 3) posted a 56 per cent 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 million in the second quarter ended Jun 30, from US$1.3 billion 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 per cent in after-hours trading.
AIG posted an underwriting loss of US$343 million in its general insurance business, compared with a US$147 million profit a year earlier.
The loss included US$674 million of catastrophes, net of reinsurance, partly reflecting US$458 million related to COVID-19 and US$126 million for civil unrest claims.
A decline in travel during the pandemic affected AIG's travel insurance business.
Net adjusted investment income dropped US$537 million from a year ago to US$3.2 billion. Performance was hurt by US$276 million in private-equity losses compared with US$238 million 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 Chief Executive Officer 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 per cent to US$8.47 billion in the general insurance business.
AIG's life and retirement unit posted US$881 million in adjusted pretax income compared with US$1.0 billion a year ago, driven partly by private-equity losses and deaths from COVID-19.
AIG completed selling a 76.6 per cent stake in its run-off company, Fortitude Group Holdings LLC, to Carlyle Group Inc and T&D United Capital Co Ltd on Jun 2. The deal reduces risk on AIG's balance sheet, the company said.