4 November 2014 Insurance

AIG profits up; authorises share repurchasing

American International Group (AIG) has seen a solid third quarter as profits increased and the board authorised additional share repurchases of $1.5 billion.

Its profits increased in the third quarter to $2.2 billion, up slightly from $2.1 billion in the third quarter of 2013.

The insurer’s third quarter of 2014 saw a pre-tax operating income increased 14 percent to $2.6 billion, compared with $2.3 billion in the third quarter of 2013.

AIG’s property/casualty division, its biggest division, posted an operating income of $1.1 billion, an increase of 2 percent. Higher net investment income improved loss experience in consumer insurance, a lower commercial insurance current accident year loss ratio, as adjusted, and reduced severe losses were partially offset by higher net adverse prior year loss reserve development and higher catastrophe losses.

Catastrophe losses were $284 million, compared to $222 million in the third quarter of 2013 and the insurer’s combined ratio deteriorated to 102 percent, compared with 101.6 percent in the same period of the prior year.

“I am excited to lead AIG forward and further build on our capabilities to serve all our stakeholders,” said AIG president and chief executive officer, Peter Hancock. “Our new management structure brings together a team that has the skill set, experience, and commitment to execute on our strategies and serve our customers around the world. Together, we remain disciplined in our approach to balancing growth, profitability, and risk and focused on maintaining the strength of our industry-leading balance sheet.

“The solid third quarter results were driven by consistent performance across our businesses. While no one quarter is a trend, our risk-adjusted return focus could be seen in various metrics including improved accident year loss ratios, modest net spread compression, and continued capital management.

“In the quarter and through early October, we repurchased $1.5 billion of AIG Common Stock and completed over $4 billion in liability management, excluding DIB activities. As a result of our strong capital position and a positive outlook for our businesses, the board has authorised additional share repurchases of $1.5 billion.”

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