AIG profits hike in Q1
American International Group (AIG) posted a strong set of results in the first quarter of 2015 as it benefitted from lower cat losses and improved underwriting results.
Profits soared at the insurer to $2.5 billion for the first quarter of 2015, compared with $1.6 billion in the first quarter of 2014. This included net realised capital gains of $874 million, which included gains totalling $565 million associated with the sale of two large shareholdings.
Its after tax operating income was stable at $1.7 billion. AIG said that operating results in the first quarter of 2015 reflected improved underwriting results in commercial insurance, lower alternative investment returns compared to the strong level a year ago, as well as the continued effect of the low interest rate environment on net investment income.
“Additionally, after-tax operating income reflected an unfavourable year-over-year impact from changes in the discount on workers’ compensation reserves,” said AIG.
In AIG’s property/casualty segment, its combined ratio improved to 97.1 percent in the first quarter of 2015, compared with 98.9 percent in the first quarter of 2014. Catastrophe losses were $71 million in the first quarter of 2015, compared to $184 million in the prior year quarter.
The segment’s pre-tax operating income increased 5 percent to $1.2 billion in the quarter, compared with $1.1 billion, mainly driven by an increase in underwriting income. AIG sad this was partially offset by lower net investment income.
Peter Hancock, AIG president and chief executive officer, said: “Our first quarter results showed progress on our financial objectives, and our commitment to balance sheet management.
“We continued to proactively manage our capital resources through both common stock and debt repurchases. We further optimised our funding profile by replacing high-cost legacy debt with new issuances at lower yields. These actions reflect our improved risk profile, and combined with continued insurance company distributions, have contributed to the board’s approval of an additional $3.5 billion share buyback authorisation.
“Our diversified business model and balance sheet deleveraging highlight how we have reduced our overall risk level. Our focus on value and long-term sustainability benefits our clients and our shareholders, and leverages our global scale to achieve the right balance between growth, profitability, and risk.”