AIG posts $1.7bn net loss for Q3

American International Group (AIG) reported a net loss of $1.7 billion for the third quarter of 2017, compared to a net income of $462 million in the prior-year quarter.

After-tax operating loss was $1.1 billion for the third quarter of 2017, compared to after-tax operating income of $1.1 billion, in the prior-year quarter.

Third quarter results included aggregate pre-tax catastrophe losses of $3.0 billion primarily from Hurricanes Harvey, Irma and Maria.

In commercial insurance, the combined ratio jumped to 195.4 percent in the third quarter from 105.8 percent in the same period of 2016. Net premiums written in commercial insurance dropped 13 percent year on year to $3.77 billion in the third quarter.

“In the third quarter, the insurance industry witnessed unprecedented catastrophic events,” said CEO Brian Duperreault.

“AIG’s resilience in the wake of these events reflects the strength of our balance sheet and capital position. I am extremely proud of our response and commitment to our customers, as well as the assistance our colleagues provided to the communities most affected by these events.”

Duperreault noted that AIG has strengthened reserves, primarily related to the 2016 accident year. Prior accident year loss reserves were strengthened by $836 million, pre-tax (net of $62 million for the amortization of the deferred gain attributable to the NICO reinsurance agreement) of which $705 million related to accident year 2016 in reaction to early unfavourable loss emergence, primarily in commercial long-tail lines.

AIG is also taking actions to enhance underwriting tools and its talent base.

“With this increased focus on underwriting, and our recently announced changes to AIG’s operating structure and executive leadership, we will continue to execute on our strategy to better position AIG for long term profitable growth,” Duperreault said.

General operating and other expenses (GOE) declined 15.3 percent year on year to $2.1 billion in the third quarter.

AIG also closed on the sale of its remaining life settlements portfolio on Nov. 1, 2017  resulting in the remittance of $1.1 billion of cash proceeds to the AIG parent in the fourth quarter of 2017 and fulfilling the $9 billion return of legacy capital.

Sign up to our free email newsletters

Other stories from Friday's AM newsletter

Disposals boost Fairfax in Q3, lift 2017 expectations

Storm Herwart causes 2017 record losses in Germany

Nat cats push HCI Q3 combined ratio to 258.2%

Nexus adds deputy chairman in trade credit expansion

Alleghany Q3 results impacted by $491m cat losses

Enstar buys Great Lakes Casualty Insurance Company

Don't miss our insurtech email newsletter - sign up today