AIG Europe posts improved results, despite softening rates
AIG Europe (AEL), the European operations of insurance firm American International Group (AIG), has reported a slight increase in its profits for 2015, despite what it called a competitive environment and softening rates.
This improvement in Europe came in spite of poorer results in 2015 at a group level.
AEL reported profit before tax of £408.5 million last year, just ahead of its 2014 profit of £406.5 million. The firm’s underwriting result also increased to £61.9 million last year, compared to £59.6 million in the previous year and its net premiums rose to £3.6 billion in 2015, up from £3.5 billion in 2014.
Its combined ratio improved to 98.2 percent last year, compared with 98.4 percent in the previous year.
AEL benefited from its broad product offering and mixture of mature and developing businesses across Europe, although currency fluctuations impacted the overall results, according to the firm.
A positive performance by the commercial business was offset by challenging conditions in the consumer business. Operating expenses decreased to £1.3 billion (2014: £1. 4 billion) through targeted cost savings.
AEL benefited from low levels of catastrophe losses, although adverse claims experienced in the property and aviation sector saw higher net claims of £2.2 billion (2014: £2.1 billion). The net loss ratio was marginally higher to 64.9 percent, compared with 62.6 percent in 2014.
As of 30 November 2015, total equity of the company totalled £3.2 billion (2014: £3.5 billion).
Anthony Baldwin, chief executive of AEL, said: “The challenging backdrop and flat investment environment that we witnessed in 2015 has reinforced the importance of staying focused on underwriting discipline and our emphasis on risk-adjusted profitability.
“Thanks to our focus on our major competencies, we have improved our business mix towards our core customers, products and distribution partners, whilst our investment in improving the customer experience has contributed to high retention ratios.
He added: “We remain confident that we can compete effectively in this challenging market by focusing our efforts on our major assets and capabilities, including our multinational expertise, global footprint, ability to deploy large capacity lines, and our strong relationships with our clients and distribution partners.”
AIG posted a big loss for the fourth quarter of 2015, reporting an after-tax operating loss of $1.3 billion, compared with after-tax operating income of $1.4 billion in the prior-year quarter.
This had a negative impact on its full year profits, which more than halved in 2015 to $2.9 billion, compared with $6.6 billion in 2014.
AIG said the fourth quarter operating loss was primarily due to adverse prior year loss reserve development, and lower returns on alternative investments.
