AIG’s Q3 $3bn nat cat loss is ‘manageable’, says Morgan Stanley

The nat cat loss estimate of $2.9-$3.1 billion for American International Group’s (AIG) third quarter are manageable, Morgan Stanley analysts said in an Oct.9 research note.

AIG said on the same day that it expects to report third quarter 2017 pre-tax catastrophe losses net of reinsurance of $2.9 billion to $3.1 billion ($1.9 billion to $2.0 billion after-tax).

The losses represent “only about a 2.6 percent impact to book value,” making it manageable, and “alleviating any capital concerns,” according to the analysts.

“With more than $3.5 billion of cash and short-term investments at the AIG parent holding company level, we see little concerns over capital from 3Q catastrophe losses. We remind that AIG contributed about $1.0 billion of capital to its P&C subsidiaries in December 2012 following Super Storm Sandy,” the analysts noted.

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