AIG profit beats on strong underwriting, investment income

AIG profit beats on strong underwriting, investment income

Insurer American International Group Inc reported a 17.6per cent rise in second-quarter profit on Wednesday, boosted by improved underwriting in its general insurance business and higher investment income.

FILE PHOTO: People exit the AIG building in New York's financial district
FILE PHOTO: People exit the AIG building in New York's financial district March 19, 2015. REUTERS/Brendan McDermid/File Photo

REUTERS: Insurer American International Group Inc beat Wall Street estimates for quarterly profit on Wednesday, boosted by improved underwriting in general insurance business and higher investment income, sending its shares up 3per cent in extended trading.

A strong performance in commercial and personal insurance in regions outside of North America helped the insurer post an underwriting profit of US$147 million in its general insurance business compared with a loss of US$89 million a year earlier.

The general insurance business reported its first underwriting profit last quarter since 2007, when it was hit by the financial crisis.

AIG, one of the largest U.S. insurers, earned US$1.43 per share on an adjusted basis. That smashed the consensus forecast for US$1.15 a share, according to IBES data from Refinitiv.

AIG shares were up 3per cent at US$54.40 in after-hours trade.

AIG said its general insurance accident year combined ratio, excluding changes from losses incurred in past years, improved to 96.1 for the quarter, from 101 a year earlier.

A ratio below 100per cent means the insurer earns more in premiums than it pays out in claims.

Chief Executive Officer Brian Duperreault took the helm of AIG in 2017, promising to return the company to its glory days and make the company's general insurance business profitable again.

"General Insurance achieved its second consecutive quarter of underwriting profitability resulting from underwriting and expense discipline, and reinsurance actions, and remains on track to deliver an underwriting profit for the full year," Duperreault said in a statement.

AIG's acquisitions under Duperreault of reinsurer Validus and insurance program manager Glatfelter Insurance Group contributed to the better ratio, along with improvements to new business, renewal terms and use of reinsurance, the company said.

The insurer's net investment income jumped 19.4per cent to US$3.7 billion, aided by higher returns from AIG's equity investments.

Net income attributable to the company's common stockholders rose to US$1.10 billion, or US$1.24 per share, in the second quarter ended June 30, from US$937 million, or US$1.02 per share, a year earlier. (https://reut.rs/2GVhQjZ)

Gross premiums in the general insurance business remained steady at US$8.65 billion from the year-ago period.

Adjusted pretax income for AIG's life and retirement business was US$1 billion, up 9per cent from US$962 million in the prior year quarter.

Strong private equity returns, including income of US$138 million from the initial public offering of a company in that portfolio, also helped fuel performance, AIG said.

(Reporting by Bharath Manjesh in Bengaluru and Suzanne Barlyn in New York; Editing by Shinjini Ganguli and Arun Koyyur)

Source: Reuters

Bookmark